A housing reset is expected to accelerate in the coming months as the Fed pushes borrowing costs beyond 6% to tame stubborn inflation. As a result, the prospect of homeownership will be pushed beyond reach for a larger share of would-be buyers.
Mortgage rates have more than doubled in the past year alone, rising from an average 2.88% in Q3 2021 to 5.89% during the week ending Sept. 8, 2022, Realtor.com reports. Along with rising home prices, a 30-year fixed mortgage rate on the cusp of 6% makes the median monthly mortgage payment nearly 63% more expensive than it was during the same time a year ago and over 78% more expensive than two years ago.
Many experts anticipate mortgage rates will cross the 6% threshold by the end of the year—if not sooner.
“Higher mortgage rates combined with still-high home prices are making it challenging for homebuyers as we head into what historically has been the best time of the year to find a better deal,” says Realtor.com Senior Economist George Ratiu. “Something has to give.”