As Mortgage Rates Begin to Bite, Home Sales Fall to Lowest since June 2020, Supply Rises for Second Month

“…The spike in mortgage rates – a result of the Fed’s widely telegraphed future crackdown on inflation – would sooner or later have to impact the crazy housing bubble. We knew that. Now the average 30-year fixed mortgage rate has spiked to well above 5%.

For example, the Mortgage Bankers Association reported this morning that its weekly measure of the 30-year fixed rate jumped to 5.2%, the highest since April 2010, two full percentage points higher than two years ago, “causing a pullback or delay in home purchase demand,” the MBA said. “Home purchase activity has been volatile in recent weeks and has yet to see the typical pick up for this time of the year.”…

…today, the National Association of Realtors reported that sales of previously-owned homes – houses, condos, and townhouses – fell to the lowest since June 2020, down 4.5% from a year ago, the eighth month in a row of year-over-year declines, even as supply of homes listed for sale rose.

The NAR expects home sales “to contract 10%” this year, it said, and it blamed mortgage rates and inflation: “The housing market is starting to feel the impact of sharply rising mortgage rates and higher inflation taking a hit on purchasing power.”…”