The Federal Reserve announced on Wednesday that it will raise its short-term interest rate by half a percentage point, signaling yet another gain in mortgage interest rates after the most recent jump to 5.1% during the week ending April 28, Realtor.com reports. Many lenders are already reporting rates in the mid-5% range for the week to come, a gain which will price even more buyers out of homeownership. Eventually, however, prices will have to fall. The question is, when?
Some economists predict that mortgage rates could rise to 6% before peaking, but other suggest that a drop could come much sooner. A lack of affordability will alleviate some inflationary pressure in the housing market, but more rate increases are likely in the near future, experts say.
The days of double-digit home price growth are probably numbered, predict housing experts. Prices will likely continue to rise, but by just a few percentage points a year as buyers can’t afford any more. They could also flatten or even dip in certain real estate markets.
Nationally, median home list prices hit $405,000 in March, up 13.5% from the same time last year, according to Realtor.com data. However, the high rates are expected to slow down the pace of price growth.
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