Mortgage Rates Cross 7%: How It Impacts PA Real Estate
PENNSYLVANIA — Rising inflation and increasing interest rates have led home mortages to hit the 7 percent mark, a level not seen for two decades. It’s making it more expensive for Pennsylvanians to buy homes , though many sellers are still making gains.The 30-year fixed-rate has not been this high since April 2002. The higher borrowing costs hit consumers as inflation persists at a 40-year-high, making almost all consumer necessities more expensive. In the greater Philadelphia metropolitan region, including the Camden and Wilmington areas, the median price of a home increased by $20,000 in the third quarter of 2022 alone, from $300,000 to $320,000. From the fourth quarter of 2021, it’s up $38,000.The Pittsburgh area, meanwhile, has seen a $31,000 increase since the first quarter of 2022, from $174,000 to $205,000. On the flip side, though, some Pennsylvania sellers are making more money, a trend that does not hold nationally. Philly area gains are up to $117,450, more than $24,000 higher than the first quarter of 2021.Pittsburgh has not been so lucky. Sellers there are now making an average of about $65,000 on sales, a 7.1 percent decrease from last quarter and a 5.8 percent decrease from last year . Nationally, the picture is bleak. 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.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.
PENNSYLVANIA — Rising inflation and increasing interest rates have led home mortages to hit the 7 percent mark, a level not seen for two decades. Sellers there are now making an average of about $65,000 on sales, a 7.1 percent decrease from last quarter and a 5.8 percent decrease from last year. The Fed has raised interest rates five times this year and is poised to do so again in November and December. 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.
