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- America’s housing market is stuck in a state of depression as mortgage rates move higher again.
- “The housing market remains in the doldrums with declining sales, inventory and prices,” Freddie Mac said.
- The 30-year fixed mortgage rate is poised to break a six-week declining streak, rising to 6.42% on Thursday.
America’s housing market is still gloomy as ever as mortgage rates turned higher again, according to Freddie Mac.
“The housing market remains in the doldrums with declining sales, inventory and prices,” said Sam Khater, chief economist at Freddie Mac, in a Thursday blogpost.
Mortgage rates are set to break a six-week declining streak, with the 30-year fixed rate mortgage rising by 15 basis points this week to 6.42% as of Thursday. The 15-year fixed rate edged lower.
“The declines in sales and deceleration in home prices began swiftly earlier in 2022 but have moderated more recently,” Khater added.
A combination of high mortgage rates, elevated home prices, recession risks and dampened consumer confidence has weighed on the US housing market, causing demand to crumble. That’s putting downward pressure on home sales and prices.
The slowdown in the housing market has come about as the Federal Reserve raised interest rates at a staggering pace to combat inflation that hit 40-year highs earlier this year. The aggressive monetary tightening lifted 30-year mortgage rates above 7% — a level not seen since the mid-2000s — this quarter.
“While the intensity of weakness is moderating, the market continues to decline and forward leading indicators suggest housing will remain weak throughout the winter,” Khater continued.
Top commentators such as Jeremy Siegel, Mark Zandi and Chen Zhao have sounded the alarm on a deteriorating housing market, with the Wharton professor forecasting a plunge in home prices over the coming year that could be as bad as the one seen during World War II.