Although mortgage rates are still low, we are starting to see those who wish to enter the housing market retract.
According to Freddie Mac, homebuyer demand has gone from 25% above pre-COVID levels at the start of the year, when mortgage rates hit record lows, to 8% above pre-COVID levels today. We even see that purchase demand is diminished today as compared to late May and early June of 2020, when mortgage rates were the same level.
This is confirmation that while purchase demand remains strong, the marginal buyer is feeling the affordability squeeze resulting from the increases in mortgage rates and home prices we’ve experienced in recent months.
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