High mortgage rates will keep hurting homebuyers for years to come

If you're holding your breath for mortgage rates to fall back to earth, it could be a while. A series of interest-rate hikes from the Federal Reserve has been the main force making mortgages more expensive. A near-record surge in home prices was already hurting affordability even before the increases. Now potential homebuyers are even more stuck.

The doubling of mortgage rates since the pandemic housing boom from less than 3% to over 6% has caused "notable retreats" in certain US markets, the strategists added, with western states seeing the steepest drop-offs.

Last week, Freddie Mac said the average rate on a 30-year fixed mortgage stood at 6.78%.

The going price for a typical home hit $426,056 in June, 1.5% below the all-time high, and just a 0.6% decline from the prior month, per Redfin. That also marked the slowest decline in home prices in five months.

"The paths toward more normalized purchase affordability could be long in some markets, or not include full reversions," the strategists said.

https://markets.businessinsider.com/news/commodities/high-mortgage-rates-housing-market-real-estate-outlook-homebuyers-moodys-2023-7