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As interest rates rise, homebuyers' demand for mortgages falls to its lowest level in 28 years
Mortgage rates reached a 23-year peak last week, resulting in the lowest mortgage demand from homebuyers in 28 years. The Mortgage Bankers Association reported a 4.2% drop in weekly mortgage applications. The average 30-year fixed-rate mortgage interest rate rose to 7.31% from 7.16% for loans under $726,200 with a 20% down payment. This surge is attributed to rising Treasury yields amid concerns of persistent high inflation. Home purchasing applications dropped 5% weekly and are 30% less than the previous year, with buyer demand at its lowest since 1995. Moreover, the supply of homes for sale hit nearly a 25-year low. Adjustable-rate mortgage applications grew to 7.6%, as some buyers opt for potentially riskier options to reduce payments. Meanwhile, refinancing applications decreased by 3%. Presently, mortgage rates hover around 7.5%.
The top five cities for property tax rates. Here's why rates can vary so widely between locations
Property taxes, which fund essential public services, vary significantly across regions, a study from the Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence reveals. Key factors influencing these differences are property tax reliance, property values, local expenditure, and classification. Katherine Loughead from the Tax Foundation emphasized that community preferences determine tax rates, with some favoring higher amenities and others opting for lower taxes. Richard Auxier highlighted variables such as state-imposed restrictions. The study examined over 100 cities, showing Detroit, Newark, and Aurora as the top three with the highest effective property tax rates in 2022. However, rates don't always translate to bills; for instance, Los Angeles, despite a similar rate to Wichita, has higher bills due to elevated home values.
Home sales decline once further in July as supply falls to a level not seen in nearly 25 years
Sales of previously owned homes declined by 2.2% in July, marking the slowest July pace since 2010, as per the National Association of Realtors. This decrease, attributed to higher mortgage rates and a tight housing supply, saw a 16.6% drop compared to the previous year. By the end of July, listings were at their lowest since 1999, with a 3.3-month supply, whereas a balanced market requires a six-month supply. Although the median home price rose to $406,700, a 1.9% increase, sales in all regions dropped, except in the West. The housing market's future faces challenges due to increasing mortgage rates.
Rates on mortgages reached their highest level since 2000
Mortgage rates surged to 7.48%, their highest since November 2000, driven by concerns over prolonged high interest rates and inflation. The recent rise is a significant 29 basis points within a week. Matthew Graham of Mortgage News Daily noted that without negative economic data, the Federal Reserve wouldn't consider policy shifts that could impact short-term rates. The current high rates, combined with the inflated home prices from the Covid pandemic, discourage potential home sellers and challenge buyers. With rates more than doubling, homeowners face the "golden handcuffs" dilemma, impacting the housing supply. In contrast, the trend of choosing adjustable-rate loans is on the rise. Homebuilders attempt to counteract high rates, but their optimism waned in August due to these increasing rates.
