Mortgage rates reach highest level in 2 decades
ATLANTA — Homebuyers are facing the highest mortgage rates in two decades, a new report shows, as elevated borrowing costs have slowed sales in Southern Nevada and around the country this year.
The average rate on a 30-year mortgage was 6.92 percent as of Thursday, up from 6.66 percent last week and 3.05 percent a year ago, mortgage buyer Freddie Mac reported.
Mortgage rates have now reached their highest level since April 2002, Freddie Mac Chief Economist Sam Khater said in a news release.
Overall, strong job and wage growth are “keeping consumers’ balance sheets positive,” but “lingering inflation, recession fears and housing affordability are driving housing demand down precipitously,” he said.
Not long ago, rock-bottom interest rates were fueling a buying binge in Las Vegas, with the market reaching its most frenzied pace in years in 2021. But house hunters pulled back in recent months, as a sharp jump in mortgage rates and higher home prices have made it all the more expensive to buy a place.
Lawrence Yun, chief economist with the National Association of Realtors, figures rates could go even higher, possibly above 7 percent.
“It just means that buyer affordability will be further harmed,” he told the Review-Journal on Thursday at the National Association of Real Estate Editors conference in Atlanta.
Yun expects home sales to keep sliding in the coming months and prices to be largely flat across the country next year. He figures about half of the U.S. will see “modest” price gains, while the other half will see some price declines.
Markets that had huge price jumps last year, such as Las Vegas, are among the areas that “will be vulnerable” to price drops, he added.
Sales prices have tumbled recently in Southern Nevada after rising almost nonstop for more than two years. People aren’t buying nearly as many houses as they were a year ago, and inventory has soared.
The median sales price of previously owned single-family homes — the bulk of the market — was $450,000 last month, unchanged from August and up 10.7 percent from September 2021, according to trade association Las Vegas Realtors.
Prices leveled off after sliding for three consecutive months, down from a record-high $482,000 in May.
Buyers picked up 2,030 houses in September, down 36.7 percent from the same month last year, while 8,121 houses were on the market without offers at the end of last month, up 134.5 percent from a year earlier, the association reported.
Las Vegas Realtors President Brandon Roberts said in a news release this month that home prices have leveled off “at least for now” and that prices and sales had been declining since mortgage rates started rising.
“The good news for buyers is that it has been at least three years since we’ve had this many homes available for sale,” he added.
Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.