Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Mortgage Rates, June 30, 2022

Mortgage rates fell this week. It appears that rates have already accounted for some of the effects of the Fed's tightening policy. According to Freddie Mac, the 30-year fixed mortgage rate dropped to 5.7% from 5.81% the previous week. Although rates are significantly higher than last year, they are still historically low, remaining below 6%.

As the second quarter draws to a close, the housing market has cooled. Nearly 12,000 fewer homes were sold during April and May compared to the pre-pandemic average. It's a fact that many households are impacted by higher mortgage rates as they no longer earn the qualifying income for the median-priced home. In the second quarter, home buying became 15% more expensive, increasing the qualifying income from $90,000 to $104,000. As seasonality trends will conclude after the summer months, it's likely an even larger reduction in home buying activity will occur. Meanwhile, inventory is improving. According to NAR, inventory rose 25% during April and May compared to 8% — the pre-pandemic average for the same timeframe. With more homes available in the market, price gains will ease by rising at a slower pace.