The average rate on the 30-year fixed mortgage rose to 4.72% on Tuesday, a 26 basis point jump since just last Friday, CNBC reports. As a result, economists are revising their home sales forecasts to accommodate a smaller pool of buyers who can actually afford added inflation on top of already elevated prices.
Home prices were up 19% year-over-year in January, but as more buyers are priced out of a heated market, some sellers may be giving in. Asking prices declined slightly following the latest surge in mortgage rates, and a larger slowdown in asking price growth could maintain high demand and keep a larger share of buyers in the mix for a frenzied spring buying season.
The rise in rates comes on top of an already sizzling housing market. Demand remains strong, and supply remains historically low. This has pressured home prices, which were already up 19% in January year over year, the latest read from CoreLogic.
“That is a double whammy that erodes affordability for homebuyers, especially first-timers,” said Frank Nothaft, chief economist at CoreLogic. “First-time buyers are a sizable part of prospective shoppers and their share of purchases has slipped from one year ago. We will be revising our home sales forecast a bit lower.”
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