HOUSING CRISIS: Rising mortgage rates and higher home prices continued to push entry-level homebuyers out of the market.
Policymakers already approved two consecutive 75-basis point rate increases in June and July and confirmed that another supersized hike is on the table in September.– the most popular among new homeowners – climbed to nearly 6% in June, though they have since moderated. The average rate for a 30-year fixed rate mortgage hovered around 5.13% for the week ending Aug. 18, according to recent data from mortgage lender Freddie Mac.
Combined with high home prices, the rapid rise in borrowing costs has pushed many entry-level homebuyers out of the market. Jerome Powell, chairman of the U.S. Federal Reserve, speaks during a news conference following a Federal Open Market Committee meeting in Washington, D.C., U.S., on Wednesday, May 4, 2022.
A new report from Redfin last week showed that home sale cancellations soared in July to another two-year high as buyers retreated from the market. About 63,000 home purchase agreements were called off in July, equal to 16% of homes that went into contract that month. "The deep correction for the U.S. housing market in 2022 continued into July with a sharp decline in sales activity and reduced construction of single-family homes," said Ben Ayers, Nationwide senior economist. "Mortgage rates have edged down in recent weeks and that could boost sales in the near-term, but affordability concerns are widespread in many local housing markets with many buyers now priced out of homes.
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