Interest Rates Are Rising, but Homebuyer Demand Is Holding Steady
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $726,200 or less increased from 6.43% to 6.55% last week, but that tighter financing didn’t seem to slow homebuyer demand. In fact, total mortgage application volume rose 3.7% last week compared with the previous week, and mortgage applications to buy a home rose 5%, according to CNBC.
That uptick in buyer activity is likely a result of slower home-price gains in a cooler market. Home prices are still higher than they were a year ago on a national basis, but some of the most expensive metropolitan markets are seeing housing costs come down on a year-over-year basis.
“Although incoming data points to a slowdown in the U.S. economy, markets continue to expect that the Fed will raise short-term rates at its next meeting, which have pushed Treasury yields somewhat higher,” wrote Joel Kan, MBA’s deputy chief economist.
Seven states — California, Washington, Montana, Idaho, Nevada, Utah and Oregon — as well as the District of Columbia, all reported lower prices in February compared with February 2022, according to CoreLogic.