US mortgage rates continue to soar, with the average rate for a 30-year fixed loan reaching 7.57%, a level unseen in over two decades. This marks the fifth consecutive week of climbing rates, according to data released on Thursday. The surge is driving potential buyers out of the market due to severe affordability constraints and is intensifying competition among those who can withstand these costs due to a shortage of properties for sale.
Redfin (NASDAQ:RDFN) Corp.'s early demand indicators are at their lowest level in about a year, reflecting the impact of the rising rates on the housing market. The affordability challenges have led to purchase demand plunging to a three-decade low, Freddie Mac's chief economist, Sam Khater, reported.
These soaring rates come as US consumer prices have increased for the second month in a row. Policymakers are considering more Federal Reserve rate hikes following an unexpected employment rise in September. Hannah Jones from Realtor.com notes that the Federal Reserve's 'higher for longer' monetary policy is maintaining these high rates, with a decrease unlikely until inflation moves in the right direction.
The housing market faces significant challenges amid these economic conditions. The combination of high mortgage rates and increasing consumer prices is adding pressure on potential buyers, leading to a slowdown in demand and contributing to the overall cooling of the housing market.
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