Housing Market Remains Strong Despite Rising Mortgage Rates and Increase in Unsold Homes Inventory

The housing market is remaining strong despite the recent rise in mortgage rates. The average 30-year fixed rate for conventional loans increased to 7.48% from 7.26% the previous week and 6.54% a year ago, according to HousingWire’s Mortgage Rates Center. However, there has been an increase in the inventory of unsold homes on the market due to the rise in mortgage rates, as stated by Mike Simonsen, founder and president of Altos Research.

Despite this, demand for new homes saw an 8.8% increase from February to March, and there are currently 543,000 single-family homes on the market, a 3% increase from the previous week and a 31% increase from last year. One positive note about the mortgage rates is that the spread between mortgage rates and the 10-year Treasury yield is narrowing, which is a good sign as stated by Mohtashami.

Federal Reserve Chair Jerome Powell’s announcement that there will be no rate cuts in the near future due to the strength of the U.S. economy has also contributed to the rise in mortgage rates. The release of the Personal Consumption Expenditures Price Index for March on Friday will provide important information on the Fed’s strategy regarding benchmark interest rates.