But after 10 rate hikes, the housing market — traditionally one of the most interest-rate-sensitive areas of the economy — is anything but predictable.
Mortgage rates then continued to climb in tandem with the Fed’s hikes until November, when mortgage rates peaked at 7.08%, despite four subsequent rate hikes since then.
Higher mortgage rates have reduced home inventoryIn theory, when mortgage rates go up, home prices should fall since it raises the cost of homeownership, thereby reducing demand.
That’s partly because the higher mortgage rates that came after the Fed hiked rates created a major lock-in effect, said Kiefer.
“That tells the crux of the story for why the housing market seems a bit odd right now,” Divounguy said.
Persons:
”, Orphe Divounguy, Banks, Freddie Mac, Charles Dougherty, Dougherty, “, Len Kiefer, ” Kiefer, Kiefer, Divounguy, Zillow’s Divounguy, ” Divounguy
Organizations:
New, New York CNN, Federal Reserve, Zillow, Fed, National Association of Realtors, “, CNN, homebuying
Locations:
New York, That’s, Wells Fargo, Realtor.com