Solid Housing Market: Demand for Homes Surges despite Increase in Mortgage Rates

The housing market remains robust despite the recent increase in mortgage rates. According to HousingWire’s Mortgage Rates Center, 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, while the 15-year fixed rate also rose to 6.72% from 6.66% in the previous week.

Despite this increase in rates, demand for new homes saw an impressive 8.8% increase from February to March, and there are currently 543,000 single-family homes on the market, a slight decrease from the previous week but still a significant increase of 31% compared to last year.

Mike Simonsen, founder and president of Altos Research, noted that with the rise in mortgage rates, there has been an increase in unsold inventory on the market. However, one positive aspect of this trend is that the spread between mortgage rates and the 10-year Treasury yield is narrowing, which is good news as it suggests that interest rates may stabilize soon.

As Mohtashami notes, this trend may be due to 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. This decision has caused investors to demand higher returns on their investments, which is reflected in rising bond yields and subsequently higher mortgage rates