It would take more than a dismal non-farm payrolls report for rates to change their current trajectory. The only question is when will rates begin to flatten and find their new normal. Since last week, the 30-year fixed rate mortgage has increased by 7 basis points to 3.20% and the 15-year fixed rate mortgage increased by 10 basis points to 2.60%.
Based on the Fannie Mae Home Purchase Sentiment Index® (HPSI) for September, more consumers agree that home prices are rising and it is not a good time to buy a home. Overall, the index decreased across three categories, dropping 1.2 points to 74.5. However, there is hope. Despite burgeoning demand right now, some analysts believe that the housing market is already “overbuilt,” meaning that we have too much supply. After pandemic-caused changes in buying patterns and investors’ consistent demand for build-to-rent single-family residences, we will have too many homes compared to population growth. Currently, household formation is 24% lower than it has been in the last four decades. As such, these experts predict a large sell and cashout once the market settles, followed by a significant drop in housing prices.