Redfin Predicts Slowdown in Home Price Appreciation as Soaring Mortgage Rates Hit Affordability
Home brokerage concern Redfin sees a housing market cool down as rising mortgage rates have reached the point where home buyers are no longer scrambling to lock in rates before they rise further but instead are focusing on jumps in carry costs as increases in monthly mortgage payments soar.
Redfin says the typical monthly payment has risen by $500 this year which is resulting in slowdowns in online searches, home tours and mortgage applications. This suggests more buyers are getting priced out and, thus, Redfin economists predict home-price growth will start to slow in the coming months.
“As rates quickly approach 5%, we expect their impact on homebuyer demand to change from a motivator—driving a sense of urgency to buy before rates rise further—to a deterrent—causing buyers to step back as the cost of homebuying exceeds their budgets. There are a number of early signs that this shift is beginning to take place,” Redfin writes in its latest report.
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