If you're on the market for a home, you likely find yourself facing higher mortgage rates, fewer homes available, and higher prices. The housing market continues to slow down, with existing home sales dropping 0.4% from July to August, according to data released this morning by the National Association of Realtors (NAR). Home sales have been sliding for seven straight months now, and were down nearly 20% compared to August last year.
One of the reasons people aren't buying homes is because taking out a mortgage has gotten more expensive, along with higher home prices. The average rate on a 30-year fixed-rate mortgage rose to 6.25% last week—the highest since October 2008, according to the latest data from the Mortgage Bankers Association (MBA). The median cost of a home, at $389,500, is also 7.7% higher than last year.
And borrowing will likely get more expensive if the Federal Reserve decides to hike interest rates by 75 basis points (or more) today, as many economists are expecting the central bank to do. The Federal Open Market Committee (FOMC), which carries out the Fed's monetary policy, is meeting to decide what that interest rate hike will be, with the decision set to come in this afternoon at 2 p.m. Eastern.
"The housing sector is the most sensitive to and experiences the most immediate impacts from the Federal Reserve's interest rate policy changes," said NAR Chief Economist Lawrence Yun.
The Fed's rate hikes are meant to help bring inflation down, but also mean that borrowing money will become more expensive for all of us—think higher interest rates on credit cards, car loans, and mortgages.
- Hira
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