Mortgage Rates Surpass 7% Ahead of Seasonal Soft Window

A mild price correction in the second half of 2022 pushed the housing market back into a state of equilibrium, though experts say that temporary stability could soon be coming to an end. On Tuesday, the average 30-year fixed mortgage rate ticked up to 7.13%, just below the peak of 7.37% reached last October.

That recent uptick in mortgage rates could set the stage for even more home price declines despite the fact that many housing experts believe U.S. home prices have already bottomed out. In addition, those month-over-month declines would come during a slow seasonal period for home sales, Fortune reports.

When considering current house price and income levels, researchers at the Federal Reserve Bank of Atlanta estimate that affordability, or rather the lack of affordability, reaches levels comparable to the peak of the housing bubble whenever mortgage rates approach the 7% range.

Economists at firms like Morgan Stanley, Moody's Analytics, and Freddie Mac expect national house prices will decline enough in the second half of 2023 to wipe out all the national gains notched in the first half of the year. Property economists at Capital Economics also believe month-over-month house price declines are about to resume.

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