The average weekly rate on the benchmark 30-year mortgage has risen swiftly since the first week of this year, when it stood at 3.2%. Last week it climbed to 5% for the first time in more than a decade. This week it rose to 5.11%, according to mortgage buyer Freddie Mac. A year ago, it was 2.97%.
Mortgage rates’ rise follows a sharp move up in 10-year Treasury yields, reflecting expectations of higher interest rates overall as the Federal Reserve starts hiking short-term rates in order to combat surging inflation.
In March, home sales reported by Dayton Realtors totaled 1,270, up a little over one percent from the sales in March 2021.
Due to the low supply and high demand, prices continued their rise in the Dayton region. The average sale price of a Dayton home was $231,464 in March, up 13 percent from last year, and the median sale price was $189,500, up eight percent from last year, according to Dayton Realtors.
The first three months of 2022 saw increases over the previous year in prices, while sales remained relatively flat. Through March, Dayton-area sales reached 3,300, down just 28 transactions from 2021 when 3,328 transactions were recorded.
Sales volume showed $729.4 million so far, a jump of over eleven percent from 2021. The average sale price year-to date stood at $221,057 and represented a 12 percent increase over 2021′s year-to-date numbers. The median sale price also grew, from $165,300 in 2021 to $182,000 through March 2022, a 10 percent increase, Dayton Realtor’s data shows.
The number of homes sold throughout Ohio in March fell from the pace set during the month a year ago, posting a 4.8% decrease, according to Ohio Realtors.
Homes sales in March 2022 reached 11,832, a 4.8% decline from the 12,429 sales recorded during the month a year ago. The average sales price across Ohio in March reached $247,123, an 11.1% increase from the $222,421 mark posted during the month in 2021.
“Ohio’s housing market experienced cooling sales in March, while average prices posted double-digit gains,” said Ohio REALTORS President John Mangas. “Overall, conditions in the marketplace are extremely competitive. Would-be buyers continue to face the challenges presented by historic low levels of homes listed for sale, combined with slight increases in interest rates.
“It is worth noting that sales in March 2022 did surpass the 11,551 sales reached during the month in 2019, a possible indication that market activity is returning to pre-pandemic levels,” Mangas added
While higher rates could translate into less frenzied competition for homes, most homeowners with a mortgage have locked in ultra-low rates over the years and will have less financial incentive to sell, which could lead to fewer homes up for sale, economists say.
Consider, out of the roughly 62% of U.S. homes that have a mortgage, some 92% of them have home loan rates at or below 5%, according to CoreLogic. And 57% of those homes have mortgages with rates at or below 3.5%.
“We’re already in record-low inventory,” said Molly Boesel, principal economist at Corelogic. “So that could make the crunch even bigger.”
Mortgage rates been declining for decades, from 18% in the early 1980s to below 3% last year. That trend added a financial incentive for homeowners, who after a few years could refinance their mortgage or sell their home and lock in a lower rate.
But the low rates over the past decade have given homeowners a financial incentive to hang on to their homes longer as rates rise.
“That was a tailwind in the housing market that generally drove turnover,” said Mark Fleming, chief economist at First American. “That tailwind now turns into a headwind.”
Looking at past periods when mortgage rates increased, Boesel estimates that higher rates could lead to 125,000 fewer homes sold this year.
Sales of previously occupied U.S. homes slowed last month to the lowest pace in nearly two years, the National Association of Realtors said Wednesday. Lawrence Yun, the NAR’s chief economist, said sales could easily fall 10% this year.
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