Rising mortgage rates and sales slowdown
Roseville, Calif. – Increasing mortgage rates over the next few weeks are diminishing affordability for a greater number of potential home buyers this spring.
For first-time home buyers, the costs of buying the same home this year compared to one year ago have increased by 40 percent due to higher home prices and higher mortgage rates, says Lawrence Yun, chief economist of the National Association of REALTORS.
Despite recent job gains, which tend to drive the housing market forward, many uncertainties in the economy and rising prices could slow home sales moving forward. Inflation is running high and mortgage rates are expected to rise even further as the Federal Reserve increases short-term interest rates.
As a result of the above factors. there will be a slowdown in home sales. We are already seeing homes stay on the market longer and although multiple offers are still common the number of offers is down.
While a slowdown may be happening, demand for housing remains strong. Rising mortgage rates are reducing the number of potential buyers, but it could open buying opportunities for those who have been waiting for the competition to slow.
Rising mortgage rates may lead to more sustainable home price growth.
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