Wall Street is now betting the Fed will pause its interest rate hike campaign next week amid fallout from the SVB failure, sending mortgage rates tumbling.
The rapid decline in affordability stems from the highest mortgage rates in years and steep home prices., home prices soared at a pace not seen since the 1970s with mortgage rates near a record low. Homebuyers – flush with stimulus cash and eager for more space during the pandemic – flocked to the suburbs.Demand was so strong, and inventory so low, that at the height of the market some buyers waived home inspections and appraisals or paid hundreds of thousands over asking price.
Homebuyer demand dried up as consumers confronted the steepest mortgage rates in years, further weighing on home prices. The median price of a home sold in January was $383,249, down 11.5% from a peak of $433,133 in May, according to Redfin.Still, even with higher mortgage rates putting homeownership out of reach for millions of Americans, many home prices are still more expensive than they were one year ago. In December, the total value of U.S. houses was still up 6.
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