More bad news has hit the housing front.
Soaring Mortgage rates, which first topped 7% in August and have dampened home buying, just can’t be stopped.
The 30-year fixed mortgage rate averaged 7.49% Thursday, according to Freddie Mac, a 22-year high. The rate registered 7.31% last week and 6.66% a year ago.
Related: Bond-market meltdown: What's happening, what it means and why you should care
“Mortgage rates maintained their upward trajectory as the 10-year Treasury yield, a key benchmark, climbed,” said Sam Khater, Freddie Mac’s chief economist. That yield hit 4.81% Tuesday, the highest since 2007.
“Several factors, including shifts in inflation, the job market and uncertainty around the Federal Reserve’s next move, are contributing to the highest mortgage rates in a generation,” Khater said. “Unsurprisingly, this is pulling back homebuyer demand.”
Evidence of that demand pullback: existing-home sales fell for the seventh straight month in August, slipping 0.7% from July and 15.3% from a year ago, according to the National Association of Realtors (NAR).
In addition to high mortgage rates, constrained inventories pushed sales down. The inventory of unsold existing homes dipped 0.9% in August from July, totaling the equivalent of 3.3 months' supply at the current monthly sales pace.
Historically, six months of supply is associated with moderate price appreciation, and a lower number tends to push prices up more rapidly, according to NAR.
Home Price Horror
Looking at prices, the median existing-home sales price registered $407,100 in August, up 0.1% from $406,700 in July and up 3.9% from $391,700 a year ago. Demand is strong for the few homes available from those able to pay cash or to afford lofty mortgage rates.
August represented the third consecutive month that prices surpassed $400,000.
"Home prices continue to march higher, despite lower home sales," said NAR chief economist Lawrence Yun. "Supply needs to essentially double to moderate home price gains."
For those of you who want to buy a home, all this argues for holding off a bit and continuing to rent. Eventually mortgage rates will return to earth, though it may not be before the second half of next year or later.
But until that happens, renting could save you money, even though rents are no great bargain now either.
