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Real Estate Frenzy Begins Slowing Down As Mortgage Rates Rise

mortgage rates up
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EDITOR'S NOTE: If you’re looking at home prices as a measure of inflation, or if you’re trying to measure inflation’s surge to time a house purchase, you might find it to be a little confusing. Yes, home sellers are starting to lower their prices as mortgage rates rise. But this appears to be a regional and categorical phenomenon (certain types of sellers in certain areas are lowering their prices). Does that mean that the housing market is still hot, or do the other segments make up the other proverbial shoe that’s about to drop? We’ll get a better reading today on the inflationary front, but it’ll be interesting to see how home buyers respond to this set of data. Check out the Axios scoop below, pay attention to Wall Street’s response, and listen for signals hinting at the next Fed move. As precious metals investors, holding for the long-term is what we do. But price volatility fueled by such moments of uncertainty may provide rare opportunities to strategically time purchases and initiate portfolio rebalances. 

Chart: Freddie Mac; Axios Visuals

The real estate frenzy might be edging down ever so slightly, as mortgage rates rise. The 30-year-fixed rate climbed to 4.72% this week, according to Freddie Mac's data.

Why it matters: That's the highest rate since December 2018, and the fastest three-month increase since 1994, Redfin said. (One daily measure has rates hovering even closer to 5%.)

Driving the news: The latest evidence of a possible slowdown comes from Redfin, which reported that 12% of home sellers dropped the price on their listings for the four weeks that ended Sunday. Last year at this time, about 9% of homeowners lowered prices.

  • "A growing share of home-sellers are dropping their prices, buyers are taking less home tours now than they were this time last year, and mortgage purchase applications are declining," Redfin economist Daryl Fairweather told Axios.

Yes, but: The cooling off is most apparent in expensive coastal cities, she said. Buyers in those pricier markets will see less competition for homes; other regions remain hot.

Originally published on Axios.

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