Higher Mortgage Rates Is What the Housing Market Needs Now
Homebuyers are more resilient than expected. Costs will have to rise again to choke off demand and bring inflation down to the Fed’s target.
On the rise again.
Photographer: Saul Loeb/AFP via Getty Images
The surprise of January was how strong the economy started off the year — particularly the housing market. All it seemed to take for buyers to come flocking back was for 30-year-mortgage rates to ease to near 6% after reaching as high as 7.25% in October.
Mortgage purchase applications are rising again. The glut of existing homes we expected as the market slowed last year never materialized. Homebuilders’ stocks have surged. Goldman Sachs Group Inc. now believes home prices will fall by 6% from the peak, rather than its previous forecasted of a 10% decline. The housing analytics firm CoreLogic is even predicting a rise in home prices in 2023.