The recent rise in mortgage rates can be attributed to significant market news, as the Federal Reserve Chair Jerome Powell stated that there were no plans for rate cuts in the near future. According to HousingWire’s Mortgage Rates Center, the average 30-year fixed rate for conventional loans reached 7.48% on Tuesday, up from 7.26% the previous week and significantly higher than the 6.54% average from a year ago. Additionally, the 15-year fixed rate increased to 6.72% on Tuesday from 6.66% the week before.
Logan Mohtashami, HousingWire’s lead analyst, predicted that higher rates would lead to an increase in housing inventory, which was already being seen despite strong demand for new homes with a growth rate of 8.8% from February to March.
As of April 19, there were 543,000 single-family homes on the market, a 3% increase from the previous week and a 31% increase from a year ago. The recent mortgage rate increases were contributing to a rapid increase in unsold home inventory according to Altos Research founder and president Mike Simonsen.
Looking ahead, the release of the Personal Consumption Expenditures Price Index (PCE) for March was expected to provide insight into how interest rates could be affected in the coming months. This data would play a crucial role in determining whether or not mortgage rates will continue to rise or potentially decline.
The narrowing gap between mortgage rates and the 10-year Treasury yield was also noted as having potential stabilizing effects on the housing market in the long term by both Mohtashami and Simonsen.
