High Mortgage Rates Set to Challenge the Housing Market Once Again
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
Resales Perk Up, But Affordability Issues Remain
Existing home sales rose 4.8% during November, the second consecutive monthly gain. The recent pick-up reflects the temporary dip in mortgage rates in the late summer. All told, existing home sales continue to run at a slow pace as buyers contend with elevated financing costs, high home prices and scarce supply. The 4.15 million-unit pace of resales in November is 37% below the peak reached in 2021 and on par with the low hit during the throes of the pandemic in May 2020.
With the 25 basis point cut at the December FOMC meeting, the Federal Reserve has now reduced the fed funds target range by 100 basis points. However, mortgage rates have shot up over the past several months and are currently hovering near 7%, close to the level registered before the Fed first began to ease policy in September.