The job market is humming, retail sales 澳洲幸运5官方开奖结果体彩网:remain strong and stocks 澳洲幸运5官方开奖结果体彩网:recently hit all-time highs, giving Federal Reser🌞ve officials cause to question whether moving interest rates to two-decade highs is slowing the economy eno👍ugh to undercut inflation.

But one area where the Fed’s interest rate hikes have been substantially 澳洲幸运5官方开奖结果体彩网:restrictive on the economy is housing, which BMO Economics Senior Economist Sal Guatieri said is bearing the brunt of high interest rates.

“Home buyers can only wish the Fed was in more of a rush to reduce rates. While most sect꧃ors continue to show resiliency, the housing market isn’t one of them,” Guatieri wrote in a recent report.

The housing market has been suffering under high interest rates that discourage homeowners with ꦍbetter terms from selling and keep 澳洲幸运5官方开奖结果体彩网:many potential buyers priced out.

In his note, Guatier🧸i pointed out that not only are home sales about 20% below long-run averages, the softened demand is keeping builders from starting work on new homes at about equally low levels.  The main culprit, Guatieri wrotꩵe, is persistently high borrowing costs. 

Mortgage Rates Hit 2024 Highs

Mortgage rates rose above 7% for the first time this year last week after Federal Reserve officials pondered pushing back the timeliꦕne for when they will cut their influential fed funds rate. The 澳洲幸运5官方开奖结果体彩网:fed funds rate affects many types of credit,ꦆ inc🌃luding mortgages. High interest rates are designed to fight inflation, which has been stubbornly high this year.

“A reversal in borrowing costs has kept affordability in the tank at the same time that other housing-related costs—澳洲幸运5官方开奖结果体彩网:insurance, taxes, 𓄧maintenance—are soaring,” Guatieri wrote.

The average interest rate on a 30-year, fixed-rate mortgage rose to 7.10%, according to Freddie Mac. That's up from 6.88% in the prior week and up from 6.39% this time last year. Interest rates had been hovering below the 7% threshold since mid-December.

High interest rates have kept many potential buyers out of the market and kept potential sellers who have the low interest rates of the pandemic era rooted in place. That situation has left relatively澳洲幸运5官方开奖结果体彩网: few homes for sale and pushed up prices on homeౠs across the country.

Rate Cut Hopes Fading

Investors are losing hope that cuts to the fed funds rate are imminent and many forecasts now predi🍨ct only one rate cut later this year. That could cause mortgage rates to rise even further.

“Despite mortgage rates being at highs last seen in December, mortgage applications have increased for two consecutive weeks," said Bob Broeksmit, president and CEO of the Mortgage Bankers Association in a prepared statement. "Recent economic data shows that the economy and job market remain strong, which is likely to keep mortgage rates at these elevated levels for the near future.” 

However, facing the potential for even higher mortgages may change the equation for some buyers and s✅ellers.

“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year," said Sam Khater, Freddie Mac’s chief economist, in a prepared statement last Thursday. "Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.”