Mortgage rates rose again this week, a second consecutive increase, pushing sub-6% rates further out of reach.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage rate averaged 6.32%, up from 6.12% the week prior.
A year ago at this time, the 30-year FRM averaged 3.92%.
The 15-year fixed-rate mortgage rose to 5.51% to 5.25%. A year ago, it averaged 3.15%.
“The economy is showing signs of resilience, mainly due to consumer spending, and rates are increasing. Overall housing costs are also increasing and therefore impacting inflation, which continues to persist,” said Sam Khater, Freddie Mac’s Chief Economist.
Shelter inflation in particular is on the rise.
A blog post by Christian Zimmermann, Assistant Vice President of Research Information Services at the Federal Reserve Bank of St. Louis, noted that shelter inflation is increasing even while prices for other goods have stalled and even decreased slightly.
“Does this mean our latest inflation episode is over except for shelter? Possibly, especially because there are data-collection lags when calculating the cost of shelter,” the post reads. Excluding shelter costs, the core Consumer Price Index averaged just 1.5% YOY over the past three months, below the Fed’s 2% threshold.
Shelter inflation largely represents rent, which has a direct relationship to who is buying homes and for how much. When rents are high, older, wealthier buyers dominate while younger, first-time buyers struggle to save for a down payment.
Rates are down a full point from their 2022 peak of 7.12%, which at first drew some buyers off the sidelines. These two weeks of increases have already taken a toll, however.
Redfin reported that its homebuyer demand measure declined for the first time in a month.
“The somewhat disappointing inflation numbers put a wet blanket on homebuyers after sub-6% rates lit a fire under them a few weeks ago,” said Redfin Economics Research Lead Chen Zhao.
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