Mortgage rates jumped to an average of 4.42% during the week ending March 24, a year-over-year increase of more than a percentage point from 3.17% in March 2021. Median home prices haven’t slowed in response to a hike in mortgage rates, and some experts worry that they might not.
Home prices were up 14.2% year-over-year for the week ending March 19, while inventory dropped 18% over the same time frame, Realtor.com reports. Rising inflation and a more aggressive approach by the Federal Reserve to control higher rates could price out a significant share of buyers over the coming months.
“We are approaching a tipping point for housing markets, as an increasing number of buyers are being priced out by rising rates, stagnating real wages, and fast-paced inflation,” George Ratiu, manager of economic research for Realtor.com, said in a statement.
“The window of record-breaking mortgage rates has closed, and the road ahead points to a return toward rates more typical of the past two decades,” Ratiu continues. “For buyers and sellers, this spring will offer a period of transition, in which high prices will combine with rising interest rates to challenge budgets already contending with high inflation.