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The recent rise of the average long-term U.S. mortgage rate, which poses a new obstacle to aspiring homeowners hoping to purchase a property during this homebuying season, could have dramatic consequences on the country’s housing market.
The national weekly average for 30-year mortgages, the most popular in the nation, was 6.88 percent as of April 11, according to data from the Federal Home Loan Mortgage Corp., better known as Freddie Mac. That was 0.06 of a percentage point higher than a week before and up 0.61 compared to a year before. The national average for 15-year mortgages was 6.16 percent, up 0.1 of a percentage point compared to the previous week and 0.62 compared to a year before.
Read more: How to Get a Mortgage
On Monday, experts monitoring mortgage rates on a daily basis noted that the national average for 30-year fixed mortgages reached 7.44 percent—the highest they’ve been so far this year and close to the 23-year weekly record of 7.79 percent reached on October 25, 2023. On Monday, the 15-year mortgage rate was 6.85 percent. At its peak on October 25, 2023, it had reached 7.03 percent.
“Big one-day jump,” commented journalist Lance Lambert on X, formerly known as Twitter. “The average 30-year fixed mortgage rate ticks up to 7.44 percent. New high for 2024.”
The rise in mortgage rates comes as homebuying season, a time when the number of homes listed for sale increases, is heating up. This climb in inventory starts in spring and normally peaks in summer before declining as the weather gets colder, marking one of the busiest times of the year for home sales. But higher mortgage rates could have an early chilling effect on the market.
Read more: Compare Top Mortgage Lenders
The median monthly U.S. housing payment hit an all-time high of $2,747 during the four weeks ending April 7, up 11 percent from a year earlier, according to a report from real estate brokerage Redfin last week. It noted that the average 30-year fixed mortgage rate, then at 6.82 percent, was more than double pandemic-era lows.
There’s not much hope that mortgage rates will come down soon, as the U.S. Labor Department said last week that inflation has risen faster than expected last month, at 3.5 percent over the 12 months to March. That was up from 3.2 percent in February.
“For homebuyers, the latest CPI [consumer price index] report means mortgage rates will stay higher for longer because it makes the Fed unlikely to cut interest rates in the next few months,” said Redfin Economic Research Lead Chen Zhao. “Housing costs are likely to continue going up for the near future, but persistently high mortgage rates and rising supply could cool home-price growth by the end of the year, taking some pressure off costs.”
Jamie Dimon, CEO of JPMorgan Chase, voiced concern last week over “persistent inflationary pressures” and said the bank was prepared for “a very broad range of interest rates, from 2 percent to 8 percent or even more, with equally wide-ranging economic outcomes.”
While the jump in mortgage rates appears modest, it makes a huge difference for borrowers, who might end up paying hundreds of dollars a month more on top of what’s already one of the most significant expenses in their lives.
Many might decide that they can’t afford to buy a home—which is what happened when mortgage rates suddenly skyrocketed between late 2022 and early 2023 as a result of the Federal Reserve’s aggressive interest rate-hiking campaign.
Between late summer 2022 and spring 2023, a drop in demand caused by the unaffordability of buying a home led to a modest price correction of the housing market. But prices have since climbed back due to the combination of pent-up demand and historic low inventory.
While the Federal Reserve doesn’t directly set mortgage rates, these are hugely influenced by the central bank’s decision to hike or cut interest rates. The Fed left rates unchanged in March and is considered unlikely to cut them this month considering the latest data on inflation.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
Frankly, however, the biggest surprise at the moment might be that sales volumes have held up pretty well over the past few weeks even as mortgage rates have climbed into the mid-7s. We’ve been talking about sales growth over the past year. More home sales are happening, but we can also see — once adjusted for seasonal patterns — that sales should be much higher now if a real market recovery were underway.
It feels like the latest macro trends will keep mortgage rates in the mid-7% range for the near term. And we’d expect that to slow home sales further. That’s why Altos Research tracks every home for sale in the country each week. The data so often defies expectations or changes very quickly. Let’s dig further into the details of the U.S. housing market for the week of April 22.
When we look at the active inventory of unsold homes on the market, we can definitely see the impact of higher mortgage rates in the past month. There are 543,000 single-family homes on the market now. That’s a 3% jump from last week and 31% above year-ago levels.
The available inventory of unsold homes on the market is building quickly due to the most recent mortgage rate jumps. There are 130,000 more homes on the market now than last year at this time.
Normally, inventory is climbing at this point in the second quarter. We’re rapidly approaching the peak of the market in terms of seller listings, and as inventory builds, the sales rate will peak by the end of June. So, it’s normal that inventory is growing now.
But when you add a spike in mortgage rates that makes homebuying less affordable, that leads to fewer buyers and inventory grows. Altos data currently shows an inflection point in April. With the most recent mortgage rate jump, inventory growth has also accelerated.
This is what is meant when we say that higher rates leads to higher inventory. We are on the path back to the formerly normal levels of unsold homes on the market. A couple more years with elevated rates will get us there.
But it’s also noteworthy to point out that falling rates reverse this trend. Lower rates mean that people snap up the existing inventory.
Growing inventory is not just about slowing demand. We are also consistently measuring more sellers coming back into the market. At 69,000 new listings unsold today, that’s 3% more than a week ago and 14% more than this time last year.
In fact, there are more new sellers this week than in any week of 2023. This selling season still has two more months of growth potential. Industry professionals would love to see 70,000 or 80,000 new listings per week in May. More sellers means more sales can happen. There’s a limit, of course, as we could eventually reach an imbalance if too many sellers flood the market and too few buyers follow suit. But we’re not close to that yet.
In the years before the COVID-19 pandemic, the latter half of April would normally see 80,000 to 100,000 new listings in a week. Now we’re at 69,000. Obviously, elevated mortgage rates slows both buyer and seller activity. There are a lot of people who will never sell their house with a 3% mortgage.
There’s unlikely to be a flood of sellers in the next few years, but we can see steady growth. Each year with higher rates will create more inventory growth and have fewer people locked into low rates. That growth is good for the market.
The available inventory of homes to buy and the new ones being listed for sale each week are what consumers care about. If I’m buying a house, do I have any houses to buy? For homebuyers, the selection they have now is the most they’ve had in years.
Real estate professionals, on the other hand, have to care about transaction volume. How many home sales are happening? Because there were so few sellers last year, the number of sales was quite constricted. That’s starting to change. The 14% increase in new listings over the past year is a really good sign that sales can grow.
When we look at the sales rate, we can indeed see that home sales are growing. There were 71,000 new contracts started for single-family homes this week. That’s 3% more than last week and 7% more than a year ago.
There are still 8% fewer sales happening each week than in 2022. At that time two years ago, there were frantic last-minute deals getting done as mortgage rates were rising quickly. So, even though rates were up back then, sales were still strong.
But the hectic pandemic-era pace of sales had slowed, so inventory was building quickly. In 2022, the new sales rates really cratered after the Fourth of July holiday.
There are now 385,000 single-family homes under contract. That’s 5% growth compared to this time last year but is still 14% less than two years ago. New sales started this week saw 7% growth while the total number of homes under contract saw 5% growth.
It takes 30 to 40 days for the typical sale to close. The homes under contract now will mostly close in April and May. The 5% annualized growth rate is less than we’d hoped for at the start of the year, but it’s creeping up even with higher mortgage rates.
Altos Research uses direct measurement rather than seasonally adjusting its numbers. There are 385,000 single-family homes in escrow to complete a sale as of today. If you were to approximate a seasonal adjustment on this number, you would see a yearly sales pace of about 4.4 million units for April 2024. That pace is up from April 2023, but it is still running slower than the typical April. The seasonal pace is where one can observe the slowdown due higher mortgage rates.
The takeaway from the weekly new pending sales data is that even though sales continue to outpace last year, that growth has definitely slowed.
The median price of single-family homes under contract is now $398,000. That jumped by 2.4% jump this week and is, in fact, a new all-time-high, surpassing the sale prices of two years ago.
These spring weeks are indeed the time when home prices climb, so it’s not too surprising that this trend is occurring now. But we’ve also been keeping a close eye on home prices in the face of these rising mortgage rates.
The prices of the homes going under contract are 6% more expensive than one year ago. Last year at this time, home prices were lower than in April 2022. But we’re now back at all-time highs. The previous peak was $395,000 two years ago.
One thing of interest in the price data is how slow this climb has been. Compared to Jan. 1, 2024, prices are up 6.6%. In most years, the increase is closer to 10% by this time in April. So, as a leading indicator for how the year ends up, this price signal is much softer than usual.
We can also see this in asking prices. The median price for all homes currently on the market is $449,000. That’s up a fraction from last week and only 1% above last year at this time.
Asking prices can be thought of as a leading indicator for future sales prices. Homes that are on the market now will get offers in May, close in June and will be reported on in July. So, the future signals for home prices aren’t falling because of higher mortgage rates, but it certainly looks like price appreciation has slowed.
Another strong leading indicator for future home sale prices is the share of homes on the market with price reductions. If more sellers have to cut their prices now, that’s a real signal for sales that will happen in the future.
Surprisingly, given the mortgage rate changes, there is no jump yet in the share of price reductions. We’ve been watching this stat closely.
This week, 32% of the homes on the market have taken a price cut. That’s actually down a fraction from last week, given a relatively strong set of new listings that hit the market and the fact that home sales are at their highest point of the year. Fresh inventory doesn’t take a price cut until after it sits for a while without an offer.
There are 3% more homes with price reductions today than a year ago. Last year at this time, price cuts were still decreasing with very tight volumes of new listings. There are more homes on the market now with price cuts than in any April on record. That shows weakness in prices, but it’s not a super high number and it’s not skyrocketing, so that implies we won’t see prices tanking anytime soon.
The takeaway here is that with the 30-year fixed mortgage at 7.4%, there is still just enough sales volume to keep home prices from dropping like they did in late 2022. The current market is not changing nearly that quickly. We’ll continue to watch data on price cuts. As mortgage rates make homes less affordable, fewer offers will be made and some sellers will cut their prices. That could accelerate in the next few weeks.
Source: housingwire.com
Mortgage rates posted a big jump last week after Wednesday’s release of a higher-than-expected inflation report.
As a result, HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.24% on Tuesday, up from 7.16% one week earlier. That’s roughly 40 basis points above the rate at the start of the year. At the same time one year ago, the 30-year fixed rate averaged 6.42%. Meanwhile, the 15-year fixed rate averaged 6.64% on Tuesday, up from 6.41% one week earlier.
As the market enters the peak homebuying season, last week’s above-consensus inflation figures brought the mortgage market back to a sour reality: The average 30-year fixed mortgage rate may be close to or above the 7% level for longer than previously expected.
“As mortgage rates increase, it’s never good news for the housing market, especially when more sellers are in the mix,” HousingWire lead analyst Logan Mohtashami said. “We saw a bounce in demand early in the year as rates fell. However, just like last year, when mortgage rates headed higher, it limits sales growth.”
As of April 12, there were 526,000 active single-family listings on the market, up 2.6% from the previous week, according to Altos Research. This uptick in inventory is a function of high and rising mortgage rates, according to Mike Simonsen, founder and president of Altos Research.
Additionally, there were 66,000 new listings unsold last week plus another 20,000 immediate sales for 86,000 total new listings, up 32% from the same week a year ago.
Last week, the U.S. Bureau of Labor Statistics reported that consumer prices were up 3.5% in March compared to a year earlier. Investors reacted by adjusting their expectations for the number of rate cuts from the Federal Reserve this year.
At the end of 2023, many investors anticipated six rate cuts for the year. A few weeks ago, three cuts became the expected norm. Now it’s two or fewer cuts, and some experts — like former Treasury Secretary Lawrence Summers — have included a rate hike in their scenarios, although the likelihood of that remains low.
In remarks made Tuesday in Washington, D.C., Federal Reserve Chair Jerome Powell said that multiple measures of inflation will need to move “sustainably toward 2% before it would be appropriate to ease policy.“
“That said, we think policy is well positioned to handle the risks that we face,“ Powell said. “If higher inflation does persist, we can maintain the current level of restriction for as long as needed. At the same time, we have significant space to ease should the labor market unexpectedly weaken.”
This report was updated to include comments from Federal Reserve Chair Jerome Powell.
Source: housingwire.com
There are now 526,000 single-family homes active unsold on the market. That’s up 2.6% from the previous week when the data included the Easter holiday. It’s a holiday week jump so it’s not super crazy, but a 2.6% jump in unsold inventory in a week is very notable. This is absolutely a function of high and rising mortgage rates. I’ve been sharing this view for two full years now. As mortgage rates rise, inventory rises. Or, to put it another way: demand slows, inventory grows. So, rates are up and inventory is undeniably growing.
Available inventory of unsold homes on the market is 30% greater than last year at this time and 102% more than in mid-April 2022. There are 120,000 more homes on the market now than there were last year. There are 250,000 more homes on the market now than two years ago. Much of this inventory increase is concentrated is a few key markets.
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Two years ago, rates were obviously rising for the first time in years and inventory was rising too. Inventory was coming off the record lows of the pandemic, but was already increasing 2-3% per week as demand slowed.
Year-over-year inventory growth like this can lead to home-price declines in the future since sales price measures lag way behind the changes in supply and demand. Because we have 30% year-over-year inventory gains now, we’ll be on the lookout for more signals of weakness in home prices as the year progresses.
It’s important to note that we don’t see any signs in the data of a major home-price crash. In early 2022, inventory rose quickly and home prices fell in Q4 of that year. Home prices recovered in 2023 very quickly though. If we finally get some stability in mortgage rates, expect stability also in home prices. If we are in a world of continued rising mortgage rates, supply and demand will continue their imbalance and we’ll likely see price adjustments.
Inventory growth is from a combination of fewer buyers as affordability worsens, but also gradually improving seller volume. There were 66,000 new listings unsold last week plus another 20,000 immediate sales for 86,000 total new listings. That’s 32% more new listings last week than the same week a year ago.
The measure from last year included last year’s Easter holiday weekend so some of this 32% is from that easy comparison. But each week in 2024 is averaging 13% more sellers than last year at this time. So we have obvious seller growth as we settle into mortgage rates higher for longer.
This concept is counter-intuitive. Many listeners are familiar with the concept of a mortgage rate lock-in. This was the topic of my Top of Mind podcast interview last week with Jonah Coste from FHFA discussing their paper on the lock-in effect.
The lock-in premise is that if rates rise, it becomes more expensive for homeowners to move, so higher rates create more lock-in and fewer sellers. But that’s proving to be only partially true. The lock-in effect keeps us with relatively few sellers: 80,000 instead of 100,000 each week in previous healthy years, but we have more sellers every week than last year even though mortgage rates are higher now.
In fact, there were more new listings last week at 66,000 than any week in 2023 and we have a couple months of spring still for that number to climb.
Meanwhile, there were 69,000 new pendings last week. These are homes that were listed, took offers and started the contract process. It takes just under 40 days on average to close the transaction, so these are sales that will close in May for the most part.
The 69,000 contracts is 10% more than a year ago and 7% more than the previous week, which included the Easter holiday. So like the inventory numbers, last week’s big jump is mostly a rebound from the holiday. But it’s really encouraging that sales each week continue to come in ahead of last year.
If rates finally fall, we’ll see this transaction rate accelerate, and we’ll see inventory fall too. But there doesn’t seem to be any inclination of rates falling. This weekly new pendings data is a very handy measure of interest-rate sensitivity.
There are 371,000 single-family homes in contract right now. That’s just 4% more than last year at this time. A lot of places in the country still have fewer sales than last year. The market is trying to grow, but a new jump in mortgage rates doesn’t help. More sales are happening with cash right now, so the mortgage indices are still at record lows. If we get lucky and rates don’t keep climbing, then we’ll continue to see home sales run just a little ahead of last year. The more stable rates stay, the more sales can inch forward.
The median price of the homes that took offers last week was $389,900. That is actually below 2022 by 1%. In 2022, home prices still had pandemic momentum into the second quarter. The median price of all the homes in contract is $399,000, which means the homes that sell in April and May will be 5% higher priced than 2023.
The median price of the active market was $447,527 last week. That’s up for the week and 1.7% above last year. The asking prices are leading indicators of where future sales prices will happen. And the growth in those leading indicators is not very strong — just barely above last year at this time.
The price of the newly listed cohort came in pretty strong in the week after Easter at $435,000, which was a new all-time high for that measure. So, not all of the pricing indicators are bearish. That’s good to keep our eyes on.
On the other hand, 32.1% of the homes on the market have taken a price cut. That’s up a fraction from the previous week, 10 basis points. If this most recent move in mortgage rates is stifling homebuyers, we’ll see the price reductions number jump in next Monday’s video.
Some of the homes that are on the market and expected offers last week didn’t get their offers because of the most recent mortgage rate jump. If they don’t get the offer, then on Monday or Tuesday, a few are going to reduce their asking price to try to stimulate demand.
Two takeaways from the price-reductions data: One, next week we will be watching for how many listings cut their prices as a result of newly higher mortgage rates. We can see that moment in September of 2022 when price cuts jumped and we saw it again last September when rates jumped. Will we see it again in next Monday’s data?
And two, because price cuts are a bit high and climbing now, we have to look at that as a slightly bearish signal for home prices for the rest of the year. Transaction volume is climbing but prices do not appear to be climbing considering these levels of unaffordability.
Source: housingwire.com
Data experts on the mortgage team at NerdWallet dig into NerdWallet’s survey research, as well as public datasets, to identify trends and provide insights on the ever-changing U.S. housing market. On this page, you’ll find some of NerdWallet’s most-read research and commentaries on home buyers and sellers, mortgage interest rates and homeownership.
For NerdWallet statistics and data on additional topics, including credit cards, banking and student loans, head to our studies and data analysis hub.
Have questions or want to speak with a NerdWallet expert? Reach out to [email protected].
Daily mortgage interest rates
Mortgage interest rates this week
Mortgage interest rates this month
NerdWallet home and mortgages expert Holden Lewis writes a monthly column covering the near-term forecast for mortgage rates.
Every winter, NerdWallet collaborates with The Harris Poll to survey U.S. adults 18 years and older. The results provide a nationally representative snapshot of how Americans perceive the housing market.
2024 Home Buyer Report: Pessimism reigns as home buyers struggle and the goal of homeownership loses some of its luster.
2023 Home Buyer Report: Higher mortgage interest rates and apprehensions about the economy have Americans unsure about their ability to purchase homes.
2021 Home Buyer Report: Pent-up demand from would-be home buyers clashes with a limited supply of homes for sale.
2020 Home Buyer Report: Buying a home is a top priority, especially for younger generations, but some feel locked out of homeownership.
2019 Home Buyer Report: Recent buyers have had to get competitive to close their deals, and many feel stretched by the costs of homeownership.
2018 Home Buyer Report: Homeownership is a widely shared goal, but concerns about costs keep some buyers sidelined.
Each quarter, NerdWallet data analyst Elizabeth Renter analyzes information from sources including the U.S. Census, the Bureau of Labor Statistics and the National Association of Realtors to better understand the challenges facing first-time home buyers.
Q4 2023: A slight bump in inventory isn’t enough to ease affordability challenges.
Q3 2023: Higher mortgage rates outpace slight price declines seen in some metros.
Q2 2023: Seasonality appears to be returning to home prices.
Q1 2023: Banks’ tighter lending standards add to the difficult climate for first-time buyers.
Q4 2022: Higher mortgage interest rates deter buyers, easing inventory woes.
Q3 2022: Price increases slow, but rising mortgage rates eat into potential savings.
Q2 2022: Falling wages and price growth intensify affordability struggles.
Q1 2022: Two years’ worth of data highlights housing market challenges.
Q4 2021: High prices and low inventory are a double whammy in some markets.
Q3 2021: Moderate improvements may be blips, not trends.
Q2 2021: Notable year-over-year decline in affordability.
Q4 2020: Typical winter shifts in the housing market may help home buyers.
Q3 2020: Competition is hot for the limited supply of homes on the market.
Q2 2020: Real estate booms as the country comes out of quarantine.
Q1 2020: Home prices rise, even as the effects of the pandemic are unclear.
Elevated mortgage rates took a bite out of new home sales in February, as they declined slightly from the previous month. Builders continue to respond to affordability concerns; half of the homes sold in February cost under $400,000, compared with 45% in January.
March 25, 2024
Latest housing market columns from Holden Lewis
Home buyers
Home improvement
2022 study: After a boom in renovations and DIY projects, homeowners may dial back home improvement plans (Nov. 2022).
2020 study: Homeowners prioritize DIY and paying for projects with cash (Oct. 2020).
Home sellers
2023 data analysis: Why homeowners may want to sell despite higher interest rates (March 2023).
2021 study: What to expect listing a home in a seller’s market (April 2021).
2019 study: What sellers should know before listing (May 2019) .
Housing market
Mortgage denials
2022 data analysis: Higher home prices and debt contribute to home loan denials (Nov. 2023).
2021 data analysis: Competition and lack of collateral drive mortgage denials (Oct. 2022).
2020 data analysis: Tighter lending standards make some home loans harder to obtain (Nov. 2021).
2019 data analysis: Debt-to-income ratio most-cited reason for mortgage denials (Oct. 2020).
Source: nerdwallet.com
UK homeowners are renting out a room in their house as a way of making some extra money amid the cost of living crisis that has pushed mortgage rates to record highs.
Over one in every 10 (12%) London homeowners have started renting out a room in their house in the past year to generate additional income, according to Barclays Consumer Spend report.
The trend is not exclusive to the capital, as some 3% of homeowners across the UK have also rented out a room in their property to make a bit more money.
UK homeowners have been particularly hit by cost of living woes, with the average rate on a two-year fixed deal currently stands at 5.74%, while for a five-year deal, rates are around 5.24%, according to figures from Uswitch.
Borrowers would need to spread their home loans over more than 70 years to be able to afford the same mortgages on offer just two years ago, banks have said.
Mortgage rates have risen substantially as the Bank of England increased interest rates to a 16-year high in a bid to tackle inflation.
The data from the Barclays report showed that one in six (16%) aren’t confident about their ability to meet their mortgage or rental payments, and 18% of those with mortgage or rent payments are adjusting their spending habits to cope with rising housing costs.
Still, consumers’ confidence in their general household finances remained steady in March, at 67%.
Jack Meaning, chief UK economist at Barclays, said: “With an expectation that the Bank of England will cut interest rates from June, and banks responding by reducing mortgage rates, our research suggests that the housing costs that have been a drag on consumers for over a year are on the cusp of a turn, and will become a boost to spending from H2 and beyond. Today’s data shows this transition happening in real time.”
Higher mortgage rates have also hit the property market, as house prices fell for the first time in six months in March amid rising mortgage rates, according to Britain’s biggest mortgage lender.
A typical home now costs £288,430, around £2,900 less than last month, said Halifax.
Household spending such as DIY and electronics fell 5.2% in March, with one in six (16%) holding off home renovations due to current economic pressures.
Consumer card spending growth flatlined in March as wet weather dampened both retail and restaurant sales.
Retail spending remained almost flat at 0.7%, brought down by falling in-store spending. Face-to-face retail (excluding groceries) was down 2.1% and clothing fell -1.8%, as spring showers deterred shoppers from visiting the high street. Meanwhile, restaurants had another challenging month, down 12.6%, consistent with the fall witnessed in February (13.4%), Barclays said.
This comes as 45% of consumers said they were continuing to rein in discretionary spending, with the majority (53%) of this group cutting back on clothing and accessory purchases, and nearly half (47%) spending less on dining out.
Britons are more concerned than ever about the cost of every day items, with concerns about general inflation shooting up to 87%.
Karen Johnson, head of retail at Barclays, said: “Retailers were braced for a more subdued start to 2024, and recent figures are in line with expectations. The wet weather has been a key factor in the slowdown in discretionary spending, as it’s meant fewer visits to the high street and to hospitality venues.
“However, in spite of this initial lull, many retailers are confident that spending will rebound in the coming months, particularly in anticipation of better weather, the energy price cap drop, an uplift in the National Minimum Wage, and the buzz around major events such as Taylor Swift’s Eras Tour and the Paris 2024 Olympics.”
A separate report by the British Retail Consortium (BRC) and KPMG Retail showed a more optimistic view on the UK retail sector in March.
Total UK retail sales were up by 3.5% on last March, above the three-month average of 2.1% and the 12-month average of 2.9%, according to the British Retail Consortium (BRC)-KPMG Retail Sales Monitor.
Food sales increased by 6.8% year on year, driven by Easter falling unusually early and the subsequent uplift ahead of the long weekend.
Easter also boosted sales of products such as cookware and tableware, as people readied themselves to host family and friends. Home textiles such as throws and pillows were also popular as consumers sought to spruce up their homes ahead of spring.
Elsewhere, wet weather dampened sales of garden furniture, barbecues, DIY products, and clothing and footwear.
Online sales continued to slide, falling by 1.4% despite strong performances in home accessories, health, beauty, and homewares.
BRC chief executive Helen Dickinson said: “After a difficult start to the year, retailers are hopeful that with warmer weather around the corner, consumer confidence will spring back up.
“A strong retail industry can boost investment across our towns and cities, and as we gear up for a general election, it is essential the next government recognises this and rethinks the burdensome costs imposed on retailers.”
Download the Yahoo Finance app, available for Apple and Android.
Source: finance.yahoo.com
Rising mortgage rates this week cast further doubt on meaningful rate cuts happening soon for homebuyers.
The average rate for a 30-year loan inched past 7% this week, settling at 7.07% on Wednesday, according to Mortgage News Daily.
A separate measurement tracking weekly average rates rose to 6.82% from 6.79%, Freddie Mac reported.
Homebuyers continued to pull back as affordability challenges worsened and consumer optimism diminished over how soon and how much interest rates could ease this year. Waiting for loan rates to decline is now the top reason buyers say they are not actively searching for a home.
“Elevated mortgage rates have been a persistent market challenge, holding back first-time homebuyers and repeat homebuyers alike, albeit for different reasons,” said Danielle Hale, chief economist at Freddie Mac. “In order for rates to decline meaningfully and sustainably, inflation needs to be convincingly on a path to the Fed’s 2% target.”
Read more: Mortgage rates remain around 7% — is this a good time to buy a house?
Homebuyer affordability continued to decline, with the US median mortgage payment increasing 2% monthly in February and 6% annually to nearly $2,200, according to the Mortgage Bankers Association (MBA).
Rising mortgage payments across the US — driven by either higher interest rates or higher home prices, or both — have considerably cooled buyers’ demand.
The volume of home-purchase applications stayed unchanged this week and dropped 13% compared to the same week one year ago, MBA data showed.
“Challenging affordability conditions and low housing supply are keeping some prospective homebuyers on the sidelines this spring,” Edward Seiler, MBA’s associate vice president, said. “The eventual, expected decline in rates in the coming months will hopefully spur new activity in the housing market.”
Expectations of a rate decline have been waning, though. Investors are now betting the Fed will cut rates by less than a percentage point instead of the 1.5% forecast at the beginning of 2024.
Despite the market shift, Fed Chair Jerome Powell recently assured the public that inflation is easing and the central bank is still expected to cut rates at “some point” this year.
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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Source: finance.yahoo.com
Residential mortgage lending activity took another downturn in the fourth quarter of 2023, with more than 90% of metro areas reporting declines, according to the latest report from ATTOM. The slump marks the 10th decline in the past 11 quarters, with total lending volume falling 16.5% year-over-year. The year proved challenging for lenders as elevated … [Read more…]
The numbers: Pending home sales fell in January as rising mortgage rates pushed buyers out of the housing market.
Pending home sales fell 4.9% in January from the previous month, according to the monthly index released Thursday by the National Association of Realtors (NAR).
Pending home sales reflect transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. Economists view it as an indicator of the direction of existing-home sales in subsequent months.
The drop in pending home sales was the largest since August 2023, when they fell 5%.
The sales pace fell short of expectations on Wall Street. Economists were expecting pending home sales to increase by 1.5% in January.
Transactions were down 8.8% from last year.
Big picture: Mortgage rates began their ascent to 7% towards the end of January, when the market saw that the Federal Reserve would not be cutting interest rates in March.
Even slight increases in rates can affect how much some buyers can afford to buy a home. At 7%, the monthly payment on a $400,000 home would be roughly $2,700, and buyers would potentially need to earn $108,440 a year to afford that comfortably.
Looking ahead, applications for purchase mortgages are trending down, as mortgage rates remain over 7% at the end of February. That indicates that sales activity may be muted in the coming months.
What the Realtors said: “The job market is solid, and the country’s total wealth reached a record high due to stock market and home price gains,” Lawrence Yun, chief economist at the NAR, said in a statement.
While “this combination of economic conditions is favorable for home buying,” he added, “consumers are showing extra sensitivity to changes in mortgage rates in the current cycle, and that’s impacting home sales.”
What they’re saying: “Pending home sales, or contract signings, measure the first formal step in the home sale transaction, namely, the point when a buyer and seller have agreed on the price and terms,” Hannah Jones, senior economic research analyst at Realtor.com, said in a statement.
“Pending home sales tend to lead existing home sales by roughly one-to-two months and are a good indicator of market conditions,” she added. And “the recent uptick in rates could mean slower seasonally adjusted sales as the spring homebuying season kicks off.”
Source: marketwatch.com
A sluggish housing market for most of last year began to heat up as the calendar turned to 2024.
In recent weeks, however, the market has cooled once again.
A surge in mortgage rates accounts for the slowdown in the housing market, experts told ABC News, pointing to elevated home prices pushed out of reach for most consumers when combined with high borrowing costs.
The jump in mortgage rates is due to stubbornly high inflation that has delayed interest rate cuts at the Federal Reserve, experts said. Mortgage rates track yields on 10-year treasury bonds, which are highly sensitive to the Fed’s benchmark rate.
“High mortgage rates and high housing prices have led to an affordability problem of a dimension that we haven’t seen in decades,” Susan Wachter, a professor of real estate at University of Pennsylvania’s Wharton School of Business, told ABC News.
The average interest rate for a 30-year fixed mortgage has soared to 6.9%, rebounding after a steady decline at the end of last year, according to a report from Freddie Mac on Thursday.
Meanwhile, home sales have plummeted. Mortgage-purchase applications fell 10% from a week earlier, data from the Mortgage Bankers Association on Wednesday showed.
“Existing home sales have fallen off a cliff,” Lu Liu, also a professor at the Wharton School at the University of Pennsylvania, told ABC News.
The housing market dynamic traces back to a highly anticipated announcement in December, during which the central bank revealed expectations of interest rate cuts in 2024.
The signal elicited a boost of optimism among key market players, who foresaw the end of the Fed’s fight against inflation and the decline of interest rates from near-historic highs. In turn, yields fell on 10-year treasury bonds, and mortgage rates soon followed suit.
Inflation, however, has refused to cooperate. Stronger than expected economic performance and resilient consumer demand have helped buoy price increases, keeping them above the Fed’s target rate.
“The strengthening of the economy is a surprise,” Wachter said. “It does raise questions about the Fed’s next steps.”
Consumer prices rose 3.1% in January compared to a year ago, slowing markedly from the previous month but missing expectations of an even larger cooldown, a report from the Bureau of Labor Statistics earlier this month showed.
Inflation stands well below a peak of 9% last year but remains more than a percentage point above the Fed’s target rate of 2%.
“The inflation rate is reflected in the 10-year treasury rate, which pushes mortgages up,” Wachter said.
When the Fed initiated the rise of bond yields with its first rate hike of the current series in March 2022, the average 30-year fixed mortgage rate stood at just 4.45%. The average mortgage is now nearly 2.5 percentage points higher.
Each percentage point increase in a mortgage rate can add thousands of dollars, or even tens of thousands, in additional costs each year, depending on the price of the house, according to Rocket Mortgage.
The rising mortgage rates have put a freeze on the housing market in part because home prices remain high, Liu said. Potential homebuyers would rather stick with mortgages that have comparatively low rates rather than shift to higher rates that would compound the elevated home prices, she added.
“A lot of people are holding back from moving or selling,” Liu said.
Observers would expect home prices to fall amid low consumer demand, but the stubbornly high housing costs may be owed to that reluctance among prospective homebuyers to first put their own homes up for sale, Liu added.
“It’s a little bit of a puzzle why home prices have remained stable or even ticked up,” Liu said. “Home owners may be buying, but they’re not selling.”
Source: abcnews.go.com