Rising Mortgage Rates Cool Red-Hot Housing Market as Affordability Declines
• Mortgage rates have surged recently due to high inflation and interest rate hikes by the Federal Reserve, making home buying less affordable • Home sales have plummeted as mortgage rates climbed, with mortgage applications falling 10% in one week recently • The housing market had started to heat up at the end of 2022 when rates declined briefly, but cooled again as rates rebounded • Inflation has remained persistently high, above the Fed's 2% target, reducing optimism of quick rate cuts • Home prices remain stubbornly elevated, possibly because homeowners are reluctant to sell and give up their low rates, creating an inventory shortage