The spring season has traditionally been one of the better times of the year to buy a house. The warmer weather brought prospective buyers outdoors and made that big-ticket purchase. But, this year, home sales in the spring might not be what they were in the past.
On May 18, Freddie Mac announced that, after two weeks of declines, mortgage rates went up to 6.39% from 6.35% the previous week. While that is below the peak of 6.73% in early March, it is higher than it was the same week last year, when it was 5.25%.
“Higher mortgage rates have slowed home purchase activity during a time in the year when typically home shoppers are out in full force,” Bright MLS chief economist Lisa Sturtevant told the Associated Press. “Rate-sensitive homebuyers have either been priced out of the market or are holding off in the hopes that rates will fall.”
Meanwhile, the National Association of Realtors announced that last month’s existing home sales fell 3.4% from March’s numbers. The organization chalked up the drop to the fluctuation in mortgage rates, among other factors.
Although home prices have fallen in some parts of the country because of higher mortgage rates, some buyers still aren’t ready to get into the market.
Earlier this month, the Federal Reserve announced a 0.25% increase to its benchmark short-term interest rate, which may have caused mortgage rates to climb. However, if the central bank notices a decline in the inflation rate, they might put the brakes on hiking interest rates for an extended period of time. That could signal more stability in the mortgage rate market and more willing buyers in the coming months.
