Mortgage rates kept climbing on the back of a string of market-moving news. Notably, Federal Reserve Chair Jerome Powell said last week at the Washington Forum that there will be no rate cuts anytime soon because of the strength of the U.S. economy.
As a result, HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.48% on Tuesday, up from 7.26% one week earlier. At the same time one year ago, the 30-year fixed rate averaged 6.54%. Meanwhile, the 15-year fixed rate averaged 6.72% on Tuesday, up from 6.66% one week earlier.
“I always believe that with higher rates, inventory should grow more; last week was the first week where I hit my target weekly inventory growth model that I set out for myself last year if rates got above 7.25%,” HousingWire lead analyst Logan Mohtashami said. “Last year, it never happened once, even with rates heading toward 8%, but this year, we have more sellers than last year. If rates go higher, it will impact sales, but I am hoping it doesn’t prevent more sellers coming into the marketplace”
Even after several weeks of mortgage rate increases, the housing market remains strong. For instance, the demand for new homes grew at an annualized sales rate of 8.8% from February to March. As of April 19, there were 543,000 single-family homes on the market, up 3% from the week prior and 31% above year-ago levels. There are 130,000 more homes on the market now compared to last year at this time.
“The available inventory of unsold homes on the market is building quickly due to the most recent mortgage rate jumps,” Mike Simonsen, founder and president of Altos Research, wrote on Monday.
One of the positive pieces of news about mortgage rates is that the spread between mortgage rates and the 10-year Treasury yield is narrowing, Mohtashami noted on Saturday.
The Personal Consumption Expenditures Price Index (PCE) for March will be released on Friday, providing valuable insights into the Fed’s next steps regarding benchmark interest rates.
