{"id":20995,"date":"2022-09-08T13:06:28","date_gmt":"2022-09-08T13:06:28","guid":{"rendered":"http:\/\/www.anthonydidonato.net\/wordpress\/?p=20995"},"modified":"2022-09-08T13:06:30","modified_gmt":"2022-09-08T13:06:30","slug":"mortgage-rates-hurt-buyers-more-than-home-prices","status":"publish","type":"post","link":"https:\/\/www.anthonydidonato.net\/wordpress\/mortgage-rates-hurt-buyers-more-than-home-prices\/","title":{"rendered":"Mortgage Rates Hurt Buyers More Than Home Prices"},"content":{"rendered":"\n

Mortgage Rates Hurt Buyers More Than Home Prices<\/p>\n\n\n\n

Mortgage rates were back on the rise this week, hitting an average of 5.55%, Freddie Mac reported Thursday. Rates are nearly double what they were a year ago, and the latest housing data from the National Association of REALTORS\u00ae demonstrates the impact of the jump in borrowing costs.<\/p>\n\n\n\n

The nation is witnessing a \u201chousing recession<\/a>,\u201d says NAR Chief Economist Lawrence Yun, as existing-home sales plummeted 20% year over year in July, according to NAR data. Contract signings also dropped 20%<\/a> in the same month. And there\u2019s been a significant pullback in the new-home market<\/a>\u2014sales in the sector were down 30%<\/a> annually in July\u2014causing homebuilder sentiment to slide for the eighth straight month.<\/p>\n\n\n\n

Further, \u201capart from rising mortgage rates, home prices continue to show double-digit year-over-year gains<\/a>,\u201d Nadia Evangelou, NAR\u2019s senior economist and director of forecasting, writes on the association\u2019s blog<\/a>. A median-priced home is worth about $40,000 more than a year earlier. While home price increases add to home buyers\u2019 costs, the impact of higher mortgage rates is much more\u2014triple the impact on a monthly mortgage payment, Evangelou notes. An increase of just one percentage point in mortgage rates has the same effect on mortgage payments as if home prices rose by 13 percentage points, she writes.<\/p>\n\n\n\n

Homes haven\u2019t been this unaffordable since 1989<\/a>, NAR reports. Rising mortgage rates have made home loans more expensive, adding to the cost of homeownership. The typical monthly mortgage payment was nearly $2,000 in June, up 54%\u2014or $679\u2014compared to a year ago. \u201cThe combination of higher mortgage rates and the slowdown in economic growth is weighing on the housing market,\u201d says Sam Khater, Freddie Mac\u2019s chief economist. \u201cHome sales continue to decline, prices are moderating, and consumer confidence is low. But amid waning demand, there are still potential home buyers on the sidelines waiting to jump back into the market.\u201d<\/p>\n\n\n\n

Freddie Mac reports the following national averages with mortgage rates for the week ending Aug. 25:<\/p>\n\n\n\n