In a new report released on Thursday (3-31-22), Redfin, the Seattle-based, technology-powered real estate company, reported that mortgage rates continue to rise at the fastest pace in history. As a result, the typical monthly mortgage payment for a homebuyer has increased more than $500 since the start of 2022.
In the report, Redfin notes that as mortgage rates quickly advance towards 5%, they are expecting their impact on homebuyer demand to change from being a motivator—driving a sense of urgency to buy before rates trek even higher—to a deterrent, causing buyers to step away from the market as the cost of homebuying exceeds their budgets. The report also notes that early warning signs are appearing that indicate that the transformation is starting to begin.
Redfin data shows that fewer people are starting online home searches and applying for mortgages than this time last year, and year-to-date growth in home tours remains far below 2021 levels. An increasing share of sellers are also reducing their prices after putting their homes on the market. The share of homes that sell quickly (within 14 days) continues to grow, but at a slower pace than earlier this year.
In a statement prepared for the release of the report, Redfin’s Chief Economist Daryl Fairweather said, “Homebuyers may not feel like the market has gotten any easier. That’s because they’re often competing against investors, all-cash buyers and migrants from expensive cities who aren’t as sensitive to mortgage rates. But there are early indicators that the market is turning, and we expect the softening to become more apparent in the coming weeks, eventually causing home-price growth to slow. We’ll be watching closely to see whether the market slows from 100 miles per hour to 90 or 100 miles per hour to 75.”
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