The 30-year fixed-rate mortgage averaged 5.22% in the week ending August 11, up from 4.99% the week before, according to Freddie Mac. That is significantly higher than this time last year when it was 2.87%.
“Although rates continue to fluctuate, recent data suggest that the housing market is stabilizing as it transitions from the surge of activity during the pandemic to a more balanced market,” said Sam Khater, Freddie Mac’s chief economist.
Affordability remains a challenge
One reason home prices keep climbing is a lack of available homes for sale. “Supply remains fairly tight across most markets,” said Khater. “The consequence is that house prices likely will continue to rise, but at a slower pace for the rest of the summer.”
A year ago, a buyer who put 20% down on a median priced $390,000 home and financed the rest with a 30-year, fixed-rate mortgage at an average interest rate of 2.87% had a monthly mortgage payment of $1,294, according to numbers from Freddie Mac.
Today, a homeowner buying the same priced house with an average rate of 5.22% would pay $1,717 a month in principal and interest. That’s $423 more each month, according to numbers from Freddie Mac.
The share of listed homes with price reductions reached 19% in July, closing in on levels not seen since 2017, according to Realtor.com. In addition, the pace of price growth has moderated.
“These shifts point toward a welcome change for buyers who are still in the market,” said Ratiu. “The upcoming fall season may offer an even better window of opportunity, as long as the inventory landscape continues improving, as we’ve seen in recent months.”