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US Mortgage Rates Increase: Contemplating the Million-Dollar Question – Buy now or Stay?
US mortgage rates increase above 7%. (Photo: Google)
The Surge in US Mortgage Rates Increase Has Pushed the Average 30-year Fixed-Rate Mortgage More Than 7.55 Percent
In an article published by WFMY NEWS, in 2023’s housing market, a clear comparison arises between the calculated pricing, negotiations, and strategic concessions in contrast to the feverish bidding, waived inspections, and rapid offers prevalent in 2021. Nonetheless, local real estate agents confirm that properties in the Triad area are maintaining a relatively brisk sales pace, undeterred by the backdrop of notably high US mortgage rates increase that is potentially ongoing. Approaching late August, the 30-year fixed rate has surged to 7.55%, marking its highest point in two decades. This situation leaves both prospective buyers and sellers facing a dilemma — whether to make a move or remain in their current position.
Ja’Net Adams, a recognized figure in financial literacy and the founder of Debt Sucks University, anticipates limited relief in the coming times. She emphasizes that the goal of the US Federal Reserve is to balance the economy, employing a strategy that involves controlling the housing market’s intensity. Although this tactic seems to yield results, the prevailing question pertains to the timing of the initiation of a downward trajectory in the US mortgage rates increase, currently anchored at 7%.
According to Jerome Powell, the chairman of the Federal Reserve, has indicated that there will be further US mortgage rates increase ahead. This trajectory will continue until inflation reaches and maintains a level of 2%, not merely a brief attainment of this mark. The current inflation rate stands at 3%, a decrease from its previous high of 9%. As long as it remains above 2%, it is anticipated that interest rates will undergo additional increases.
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Existing Home Sales Drop 19% in June Amidst Soaring Prices and US Mortgage Rates Increase
In June, existing home sales dropped by nearly 19% compared to the previous year, as reported by the National Association of Realtors. The shortage of available listings has contributed to elevated housing prices, with the median price of existing homes reaching $410,200 in June, the second-highest recorded since 1999.
Experts don’t anticipate a cooling off of the housing market anytime soon, especially in the face of the ongoing trend of elevated US mortgage rates increase. Goldman Sachs, an expert, recently revised their forecast, projecting a 1.8% increase in home prices this year and a 3.5% jump in 2024. Affordability remains a challenge due to the combination of a tight housing supply and unwavering demand, leading prospective buyers to feel discouraged by increasing mortgage rates.
The shortage of available pre-owned houses on the market has prompted potential buyers to contemplate newly built homes. The Census Bureau reported a nearly 24% surge in new home purchases in June compared to the previous year. Additionally, housing construction initiations saw an approximate 6% rise in July compared to the preceding year. The timeline for potential US mortgage rates increase remains uncertain, causing uncertainty for both prospective homebuyers and those observing the market.
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