As mortgage rates inch closer to 7%, hundreds of thousands of inflation-weary homebuyers across the U.S. are backing out of deals.
“The growth in new pendings looks like it slowed just a touch this week, which could illustrate that this recovery stalls when mortgage rates are at 7%, but resumes when they’re closer to 6%,” Mike Simonsen, president and founder of Altos Research, told Yahoo Finance. “It’s not yet a trend, but a signal that we can see people waiting to see if mortgage rates go back down in three weeks and they are better off.
Buyer demand stalled as new economic data cited an uptick in inflation last month, triggering mortgage rates to climb nearly half a percentage point towithin three weeks – hitting its highest point since the start of the year. The result: homes became less affordable. “Home sales and our pending numbers slowed way down toward the second half of last year, especially when mortgage rates climbed and homebuyers stopped cold,” Simonsen said. “It seems like pending home sales had reached a bottom last year, but a big spike in mortgage rates can be absolutely impactful on people and slow down the market — and if rates jump over 7% pending home sales could start falling again like last year.