Don Peebles, founder, chairman and CEO of Peebles Corporation, predicts adverse conditions for the real estate market with higher interest, mortgage rates and commercial building problems.Thank you for reading this post, don't forget to subscribe!
Mortgage rates continued to rise this week and once again near 8% due to reduced demand to buy.
Freddie Mac reported Thursday that the average rate on the benchmark 30-year fixed mortgage is now 7.79%, up from 7.63% last week and 7.08% a year ago.
Rates on 15-year mortgages also climbed to an average of 7.03% after falling to 6.92% last week. A year ago, the rate on a 15-year fixed note averaged 6.36%.
A sign is placed in front of a home for sale on July 14, 2022 in San Francisco. The housing market is stalling as mortgage rates continue to climb. (Justin Sullivan/Getty Images)
Freddie Mac said it marked the seventh consecutive week rates have risen, the longest stretch of consecutive increases since spring 2022.
Adult children moving in with their parents to save house
“Rates are set to rise a full two percentage points in 2023 alone and as we approach Halloween, the impact could scare off potential home buyers,” Sam Khater, chief economist at Freddie Mac, said in a statement. “Buying activity has slowed to a near halt, affordability remains a significant barrier for many and the only way to address this is lower rates and more inventory.”
Home in Hercules, California on August 16, 2023. Mortgage rates are now the highest they have been in more than 20 years and continuing to rise, near 8%. (David Paul Morris/Bloomberg/via Getty Images)
With mortgage rates at their highest level in more than two decades, more and more potential buyers are shying away from the cost of a home down payment. Plus, more potential sellers are choosing to keep their homes instead of moving and taking on an interest rate that may be double their current rate.
Economists now predict that 2023 will be the slowest year for home sales since 2008, when the housing bubble burst.
This housing hotspot continues to lose buyers
Redfin estimates there will be only about 4.1 million sales of existing homes nationwide by the end of the year due to inflated home prices amid persistently high mortgage rates and low inventory, causing potential buyers to reconsider their plans.
Rising mortgage rates are cooling the housing market. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
The real estate brokerage also reported that 16.3% of home purchase agreements in the US were canceled last month, the highest rate in almost a year.
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Data released last week by the Mortgage Bankers Association showed that mortgage applications in September also fell to the lowest level since 1995.
Fox Business’ Daniela Genovese contributed to this report.