Mortgage rates reached 7.49% for 30-year fixed-rate loans during the week ending Oct. 5, up from the previous week's 7.31%. This steep increase, marking a 23-year high, is driven by rising inflation, labor market fluctuations, and uncertainty regarding the Federal Reserve's actions. Elevated rates are dissuading potential homebuyers, making homeownership less affordable, even as housing inventory remains limited, Realtor.com reports.
The median home price stands at $430,000, putting further pressure on buyers, but prices have not exceeded the previous year's record high of $449,000. Despite mounting affordability challenges, eager homebuyers are still active in the market, and experts anticipate homes will continue to sell relatively swiftly compared with last year.
Whether these rates will edge even higher toward the dreaded 8% threshold remains anyone’s guess—but what does seem clear is that these rates aren’t just a random blip, but have staying power.
“Mortgage rates have remained firmly in a near 20-year-high territory over the last few weeks,” notes Realtor.com economic research analyst Hannah Jones in her analysis. “The combination of high mortgage rates and elevated home prices continue to push homeownership out of the realm of possibility for many would-be buyers.”