Mortgage Rates Cross 7%: How It Affects New York Real Estate
NEW YORK — Home mortgage rates have hit 7 percent for the first time in 20 year s as the Federal Reserve aggressively raises rates to tame inflation, making it more expensive for buyers in New York to acquire homes and less profitable for owners to sell them.The last time the 30- year fixed-rate was this high was in April 2002. The higher borrowing costs hit consumers as inflation persists at a 40- year -high, making almost all consumer necessities more expensive. A year ago at this time, the 30- year fixed-rate mortgage averaged 3.14 percent, according to Freddie Mac — the Federal Home Loan Mortgage Corporation.In a report last week, ATTOM Data, a curator of nationwide real-estate data, said that third-quarter seller profits were down 3 percent on median-priced, single-family homes and condos in more than half of 186 metropolitan areas tracked. Mortgage rates stood at above 6 percent at the time the report was released. The report showed that profit margins — or the percentage change between median purchase and resale prices — dropped from 57.6 percent to 54.6 percent. Seller profits are still higher than they were a year ago, when margins came in at 48.8 percent.In the New York-Newark-Jersey City region, however, home prices rose 7.5 percent from the second quarter to the third quarter of 2022. The year -to- year change in home prices was up 12.7 percent. Home sellers saw gains in profits as well. In the New York-Newark-Jersey City region, profits from the second quarter to the third quarter of 2022 rose 8.4 percent. The year -to- year profit gain was up 30.1 percent.The Commerce Department said in a better-than-expected report Thursday that the economy grew at a 2.6 percent annual rate from June to September, snapping two straight quarters of contraction. The gross domestic product grew after two months of stagnation, and exports and consumer spending were both up, backed by a healthy job market. The Fed has raised interest rates five times this year and is poised to do so again in November and December. Analysts say that has helped tamp down inflation, but is causing upheaval in the housing market.Housing investment plunged at a 26 percent annual pace under the surging interest rates . The third quarter was the sixth in a row to see a drop in residential investment. Construction of new homes is down about 8 percent from a year ago. Many potential homeowners are putting off the decision to buy, waiting “to see where the housing market will end up, pushing demand and home prices further downward,” Sam Khater, chief economist at Freddie Mac, said in a news release. Buyers purchasing a $400,000 home at a 7 percent fixed-rate mortgage would pay about $760 more a month than they did at the end of 2021. That’s about $150 more than last week’s rate, according to Barron’s.
NEW YORK — Home mortgage rates have hit 7 percent for the first time in 20 years as the Federal Reserve aggressively raises rates to tame inflation, making it more expensive for buyers in New York to acquire homes and less profitable for owners to sell them. In the New York-Newark-Jersey City region, however, home prices rose 7.5 percent from the second quarter to the third quarter of 2022. The year-to-year change in home prices was up 12.7 percent.