In October, life-driven homebuyers will proceed. Everyone else will wait for mortgage rates housing market to decline, making homes cheaper. They’ll have to wait months, not weeks. The highest mortgage rate housing market reached since 2000 in September and may rise in October.
Difficulty in Finding Properties Due to Increase in Mortgage Rate Housing Market
Adventuresome home searchers may find more sellers lowering their rates, but most may struggle to find acceptable properties to put offers on. The Fed’s monetary policy committee convened Sept. 19-20. Fed members’ three-plus-year short-term interest rate estimates were included in its updated economic projections. The mortgage rate housing market remained unchanged in the three weeks before the Fed meeting as the market awaited the economic prediction summary to fall.
These estimates startled the mortgage market. Fed members said they expect short-term interest rates to remain higher longer than the mortgage rate housing market projected. After the Fed meeting, the 30-year fixed-rate mortgage rose above 7.25% for the first time since late 2000. The rising mortgage rate housing market reduces housing affordability, which has been dropping since early 2021. The Federal Reserve Bank of Atlanta’s housing affordability index has been tracking since 2006, and July’s index was the lowest ever. Since July, mortgage rates in the housing market have risen, making homebuying difficult.
Another Wave of Increase in Mortgage Rates
Mortgage payments have risen after five months of rising rates. Altos Research president Mike Simonsen claims 40% of home sellers have cut their prices due to affordability in a weekly YouTube video. With decreased mortgage rates, 30% of houses on the market were discounted in spring. Homebuyers may rejoice as more sellers drop prices. The lack of properties remains a problem. According to NAR, 1.1 million residences were for sale in August. In August 2019, 1.83 million properties were for sale, around pre-pandemic levels.
Fannie Mae and the MBA vary on last-quarter mortgage rates. Fannie Mae expects a little gain at year’s end, but the MBA predicts a first-half 2024 recession. Both organizations projected higher rates before the Sept. 19-20 Fed meeting. At the end of August, I expect mortgage rates to climb in September due to Fed uncertainty. Mortgage rates rose after the Sept. 20 Fed decision. Freddie Mac said that the average 30-year mortgage rate reached 7.31% on Sept. 28, the highest since Dec. 15, 2000.
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