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Mortgage rates climb above 5% once again

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30-year fixed-rate mortgages averaged 5.22% in the week ending Aug. 11, up from 4.99% the week before, according to Freddie Mac. This is significantly higher than last year’s 2.87%.

“Rates continue to fluctuate, but recent data are stabilizing as the housing market transitions from a surge in activity during the pandemic to a more balanced market,” said Sam Cater, chief economist at Freddie Mac. suggests that

Earlier this week, the consumer price index for July indicating that inflation has begun to slow, This is mainly due to lower energy costs. Housing, which accounts for about a third of the basket of goods and services tracked by the CPI, eased slightly last month but remains high.
George Ratiu, Manager of Economic Research at Realtor.com, said: “Amid fears of a recession, stay uplifted, August seems to offer a bit of a breather. ”

Affordability remains a challenge

One reason home prices continue to rise is the lack of available homes for sale. “Supply is still pretty tight in most markets,” Khater said. “As a result, house prices are likely to continue rising, but at a slower pace for the remainder of the summer.”

In addition to rising housing prices, Inflation is a bigger part Falling incomes and rising borrowing costs for prospective homebuyers are reducing their purchasing power.

A year ago, buyers who paid a median $390,000 home with a 20% down payment and the rest with a 30-year fixed-rate mortgage with an average interest rate of 2.87% reported monthly mortgage payments was $1,294. From Freddie Mac.

Today, if a homeowner bought a similarly priced home at an average interest rate of 5.22%, they would be paying $1,717 a month in principal and interest. That’s $423 more each month, according to Freddie Mac’s data.

higher mortgage costs Already influencing buyers, sales of both new and existing homes have declined in recent months. The real estate market is showing signs of rebalancing as potential homebuyers respond to these rising costs.
“Homes for sale inventory rose strongly in July, heading toward levels not seen since mid-2020,” Latiou said. many homeowners beginning to adapt to new realities We will resort to lower prices to incentivize buyers.”

According to Realtor.com, the share of discounted listed homes reached 19% in July, approaching levels not seen since 2017. In addition, the pace of inflation has slowed.

“These changes represent a welcome shift for buyers still in the market,” said Ratiu. “As long as inventory conditions continue to improve, as we have seen in recent months, the next fall season could offer even better opportunities.”

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