Pending home sales plunge as mortgage rates hit 20-year highs
INDIANAPOLIS (WISH) — U.S. mortgage rates surged to their highest level in nearly 23 years this week as inflation pressures persisted, according to CNN.
The 30-year fixed-rate mortgage averaged 7.31% in the week ending September 28, up from 7.19% the week before, according to data from Freddie Mac. A year ago, the 30-year fixed-rate was 6.70%.
“The 30-year fixed-rate mortgage has hit the highest level since the year 2000,” said Sam Khater, Freddie Mac’s chief economist, in a statement. “However, unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory. These headwinds are causing both buyers and sellers to hold out for better circumstances.”
Mortgage applications continued to drop last week, according to the Mortgage Bankers Association, as mortgage rates went higher.
“Rates over 7% and low for-sale inventory continue to create affordability challenges for prospective buyers,” said Bob Broeksmit, MBA president and CEO. “Until rates start to come back down, we anticipate housing market activity will remain slow.”
Meanwhile, Pending home sales plunged in the U.S. last month as high mortgage rates deterred more would-be buyers and sellers from making deals.
The National Association of Realtors’ Pending Home Sales Index tumbled 7.1% to 71.8 in August, a much greater decline than the 0.8% drop analysts polled by Refinitiv expected. Year over year, pending transactions are down 18.7%, the NAR’s data shows.
“Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers,” said Lawrence Yun, NAR’s chief economist. “Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets.”
Redfin reported earlier this month that the median monthly mortgage payment hit an all-time high of $2,632 during the four weeks ending Sept. 10. At the same time, the average interest rate for the benchmark 30-year fixed-rate mortgage has remained above 7%, and hit a 23-year high of 7.41% last week, according to the Mortgage Bankers Association.