As mortgage rates continue to rise, more Americans are feeling stuck in their current homes, unwilling or unable to move at today’s higher borrowing costs. The 30-year fixed-rate mortgage rose to a 7.31% average this week—the highest level since 2000, Freddie Mac reports.
“However, unlike the turn of the millennium, house prices today are rising alongside mortgage rates, primarily due to low inventory,” says Sam Khater, Freddie Mac’s chief economist. “These headwinds are causing both buyers and sellers to hold out for better circumstances.”
Indeed, economists are blaming the higher rates—which have floated above 7% for the last several weeks—as a leading culprit behind tumbling home sales. Contract signings fell 7.1% month over month in August. The real estate market is already slowed down as it heads into the even slower months of fall: In August, pending home sales were nearly 19% lower than a year ago, according to National Association of REALTORS®’ latest housing index.
Jessica Lautz, NAR’s deputy chief economist, says home buyers are being squeezed by the higher borrowing costs. With this week’s 7.31% average for mortgage rates, the typical monthly loan payment on a median-priced home at $413,500 would be $2,270, Lautz says. For a newly built home with a price of $430,300, which is the median in that category, the monthly mortgage payment would be $2,362, she adds.
Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 28:
- 30-year fixed-rate mortgages: averaged 7.31%, rising from last week’s 7.19% average. A year ago, 30-year rates averaged 6.70%.
- 15-year fixed-rate mortgages: averaged 6.72%, increasing from last week’s 6.54% average. Last year at this time, 15-year rates averaged 5.96%.