Risting Mortgage Rates Are Causing Home Buyers to Pull Back
We’ve had two weeks in a row with inventory climbing, and price cuts seem to be accelerating. These market-slowing characteristics seem suspiciously coincident with the spike in mortgage rates to over 6% a couple weeks ago. I think home buyers are very sensitive to mortgage rates now.
When rates spike, it quickly removes a group of buyers from the market, and we start to see fewer offers. Sellers notice this, so we see more price cuts. And we have fewer homes go into contract, so inventory builds a little. These are the nuanced changes we’re watching every week in the data.
In this week’s Altos update, I look at all the indicators pointing towards an abrupt slow-down in buyer demand, how that’s impacting the market, and what’s on the horizon for prices, inventory, and more.