US mortgage rates have climbed above 7%, their highest level in more than a year, Compass Chief Economist Mike Simonsen said on Market Domination. Simonsen said demand has measurably weakened over the past couple of months as rates marched toward 7%, after dipping briefly under 6% at the end of February before the Iran War started, which spurred reasonable year-over-year growth in the second quarter. Weekly pending sales data showed 4%, 5% and 6% growth in the second quarter, but rates began climbing again in the upper sixes, and in July, August and into September transaction volume dipped below that level, making the latest NAR number no surprise. He noted the market has been in a six and a quarter to seven and a quarter range for four years, with sales slowing notably when rates rise above it, and that the impact is uneven: home sales at the lowest price points are down most year over year, while sales at higher price points are still up. Simonsen said the 7% threshold carries both a psychological and a real impact, since every marginal dollar moves demand and higher rates push purchases out of reach.
Compass IncCompass's chief economist says mortgage rates above 7% have measurably weakened housing demand and pushed transaction volume below prior levels, hurting the brokerage's sales.
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