High Mortgage Rates Are Keeping Home Sellers at Bay, but for How Much Longer?
Since the final quarter of 2022, higher mortgage rates have kept prospective buyers glued to the sidelines and would-be sellers stuck in their current homes. Wednesday marked the 11th benchmark rate hike by the Federal Reserve among the last 12 Fed meetings, sending the Fed’s rate—which directly impacts mortgage rates—to a 22-year high of 5.25%-5.5%.
Housing demand remains steady as buyers adjust to an inflated 7% rate, but many house hunters are waiting for rates to drop significantly before jumping back into the for-sale market, Realtor.com reports.
Experts advise home buyers to forget what they saw during the pandemic when it came to rates. “I don’t think people should expect mortgage rates to go back to the 3% range,” Melissa Cohn, regional vice president at William Raveis Mortgage, told MarketWatch. “We have short-term memories when it comes to where rates were before COVID.”
The good news: rates are expected to fall over the next few years, just not to the most recent low of 2.71% in December 2020. In its July housing forecast, Fannie Mae said it expects the 30-year to go below 6% at the end of 2024. While many homeowners and homebuyers may feel discouraged by that forecast, experts said people will likely acclimatize to a higher interest-rate environment, as people’s circumstances change and selling becomes more imperative.