According to the latest statistics released by the Mortgage News Daily (MND) on Tuesday and Wednesday (the 29th and the 30th), the 30-year fixed mortgage rates continued to rise. After reaching a new high since November 2023 at 7.58% on Tuesday, it further increased to 7.60% on Wednesday. Industry experts believe that the soaring rates will bring new impacts to the entire U.S. real estate market.
Directly related to the rise in mortgage rates is the 10-year U.S. Treasury bond yield. According to data from Dow Jones Market, the yield has been on the rise since last Monday (4.96%), reaching 5.29% on Wednesday, the highest level since July 2007.
The 10-year bond yield directly affects the borrowing costs of consumers, businesses, and the U.S. government by trillions of dollars. As mortgage rates rise accordingly, its impact will be directly reflected in the real estate market.
The 30-year mortgage rates have been rising for six consecutive weeks, climbing to 7.3% last week. Joel Kan, Vice President and Deputy Chief Economist of the Mortgage Bankers Association (MBA), believes that with mortgage rates hitting a three-year high, borrowers will be forced to adopt a wait-and-see attitude.
Kan pointed out that mortgage applications have dropped by 6% recently, with both home purchase and refinancing applications decreasing to the lowest levels since 2023. Refinancing applications for government programs have fallen by 13%, with double-digit declines seen in both Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) applications.
Furthermore, Jake Krimmel, Senior Economist at Realtor.com, observed that normally during this time of the year, there is a significant increase in real estate demand. However, this year, due to the interest rate environment and potential geopolitical uncertainties, the autumn stagnation has arrived earlier.
In September, the median listing price for homes in the U.S. was $419,000, down 1.2% from the previous month and 1.4% year-on-year.
Krimmel told Fox Business that the rise in mortgage rates means fewer buyers this fall compared to previous years. He believes it is worth paying attention to whether some sellers will repeatedly lower prices in a short period of time, how significant the discounts offered will be, whether it will lead to more signings, and whether it will prolong the time homes remain unsold.
He explained that the volume of pending home sales and inventory has been abnormally high for several months, signaling a stagnation in the real estate market, which should be monitored in October.
Data from the real estate transaction company Redfin shows that in the fourth week ending on September 20, 21% of sellers reduced their asking prices, slightly higher than the 19.8% during the same period last year, marking the highest proportion recorded by the company since 2022.
Redfin analysts believe that, in general, an increase in the rate of sellers reducing prices indicates that their previous pricing was too high. However, this time, the increase in the reduction rate is only slight, indicating that some sellers are not willing to reduce prices and are still waiting for the right opportunity, while others may withdraw from the market if they cannot sell at a good price.
Asad Khan, Senior Economist at Redfin, pointed out that those who can sell their homes quickly understand the importance of accurate pricing from the beginning. Sellers who overprice their homes may rely on outdated market data or be too optimistic about the possibility of triggering price wars.
He stated that many sellers are gradually coming to terms with reality – with mortgage rates staying above 7%, economic conditions unclear, and many listings remaining unsold in the market, they eventually reduce their selling prices.