The Housing Market Enters a Summer Loop-de-Loop
And high mortgage rates add to worries about affordability and home prices overall.
Rates on a 30-year, fixed-rate mortgage on Thursday reached 7.22%, according to Mortgage News Daily, the highest rate since November.
That data was part of a summer loop-de-loop in home prices and affordability that included homes selling above their asking price for the first time since August, according to Redfin, and homebuyers facing overvalued markets despite price moderation, according to researchers at Florida Atlantic University (FAU) and Florida International University.
Those researchers said homebuyers waiting for a break in the market may not find it anytime soon.
“7% mortgage rates are the new normal and people are accepting it,” added Robert Reffkin, CEO of Compass, said Thursday, according to a release.
Redfin said low inventory and steady demand are buoying home prices, with sales averaging 100.1% of ask during the four weeks ending July 2.
The median home-sale price was down just $1,000 (-0.3%) from a year ago when prices were near record highs.
Redfin said that new listings are down 25% from a year ago and the total number of homes for sale is down 12% as homeowners hold onto their relatively low mortgage rates.
According to FAU and FIU, Atlanta remains the most overvalued market in the country, with buyers paying an almost 48 percent premium.
Detroit is next highest at 45.88 percent overvalued; Tampa, 43.09 percent; Memphis, 42.65 percent; North Port, 42.59 percent; Cape Coral, 42.18 percent; and Charlotte, at 41.63 percent.
“Prices are still moderating in the majority of the country, especially east of the Mississippi,” noted Ken H. Johnson, Ph.D., real estate economist at FAU’s College of Business. “There’s not much price movement. But, once you go west, you see some price declines.”
CNBC reported that for a homebuyer taking out a $400,000 mortgage, the monthly payment of principal and interest rose $83 to $2,720 in just a week as the 30-year fixed mortgage rate jumped 31 basis points in the past week.
The daily average 30-year fixed mortgage rate was 7.08% on July 5, down just slightly from a half-year high of 7.14% a month earlier, according to Redfin.