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Mortgage rates increased from 6.54% last week to 6.72% for a 30-year fixed home loan for the week ending Oct. 31, according to Freddie Mac.
“Mortgage rates reached their highest level since the beginning of August,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Although uncertainty will remain, it does appear mortgage rates are cresting, and we do not expect them to reach the highs that we saw earlier this year.”
This marks the fifth week in a row that mortgage rates have risen.
“While we initially anticipated that falling mortgage rates would lead to a busy fall, the recent surge in rates may have disrupted many buyers’ and sellers’ plans,” explains Realtor.com® economist Jiayi Xu in her analysis.
Will rates continue this unpredictable trajectory continue as we head into the winter real estate season? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in the latest installment of our Weekly Housing Market Update.
The mortgage rate debate
Strong-than-expected economic data, including a robust jobs report, has kept mortgage rates from falling over the past month.
“First, the strong economy is even stronger than anticipated, causing investors to re-think how quickly the Fed will cut rates,” Mark Zandi, Chief Economist of Moody’s Analytics said on X. “Equally important is investors’ rising expectation that former President Trump will win re-election (look at betting markets). Investors are taking Trump at his word and believe if he wins it will lead to higher tariffs, immigrant deportations, and deficit -financed tax cuts in a full employment economy, all of which means higher inflation and more government borrowing. The recent surge in mortgage rates is a clear indication what investors believe a Trump victory would mean for the economy and the nation’s fiscal outlook.”
No matter who wins the election, the remedy for this upward trend in mortgage rates “could be if upcoming economic data aligns more closely with expectations,” says Xu.
That may happen Friday with the release of the October jobs report—an indicator the Federal Reserve uses to track the health of the economy.
Another major factor that has prevented downward progress in mortgage rates is “increasing uncertainty over the outcome of next week’s election,” according to Realtor.com senior economist Ralph McLaughlin.
Yet no matter who wins or loses, “we expect stability to reemerge toward the end of November and into early December,” adds McLaughlin. He adds that rates are expected to settle back to around 6.3% by the end of the year.
Listing prices inch up slightly
Mortgage rates didn’t fall this week, but home prices did—by 1.1% year over year for the week ending Oct. 26 compared to the same time last year.
This marks the 22nd consecutive week that the median list price was less than or equal to what it was in the corresponding week in 2023. (The median-priced home was $424,950 in October.)
However, when a change in the mix of inventory toward smaller homes is accounted for, the median listing price per square foot increased by 2.0% the week ending Oct. 26 year over year.
The number of homes for sale spikes
In October, housing inventory was the highest it has been since December 2019, before the COVID-19 pandemic.
Housing stock was 27.6% higher for the week ending Oct. 26 than the prior year, marking 51 weeks in which the number of listings has grown year over year.
Yet, it was also the fifth week of slowing growth and the lowest annual change to housing stock since April.
“Much of the inventory build up is due to more seller activity than buyer activity,” says Xu. “However, if mortgage rates keep rising in the short term, we could see a decline in both seller and buyer activity.”
Fresh listings fell for the week ending Oct. 26, with 0.7% fewer new listings hitting the market than a year ago.
This isn’t entirely surprising, since many homeowners are still experiencing the “lock-in mortgage effect”—which means they’re unwilling to trade their current interest rate for a higher one.
Indeed, 84% of outstanding mortgages have a rate of 6% or lower, and more than 75% have a rate of 5% or lower. Sellers willing to give up those rates means there are fewer fresh listings.
“We expect the ‘lock-in effect’ to tighten as home sellers—who often are future buyers—decide to wait out high mortgage rates,” says McLaughlin.
The pace of home sales holds steady
Homes didn’t exactly fly off the listing page the week ending Oct. 26, with houses spending eight days more on the market compared with the same week in 2023. (The typical home spent 58 days on the market in October.)
“The decline in prices, fewer new listings, and longer days on the market indicate a sluggish housing market,” says Xu.
But for those aiming to purchase a home before the year ends, Xu says leveraging the slower market, increased inventory, and relatively stable prices could be a smart strategy.