Higher mortgage rates are throwing a bucket of ice-water on the super-heated housing market. Home prices in August were down about 6% from their peak in June, the biggest 2-month drop in prices in nearly a decade. The pace of home sales slowed for the 7th straight month.
“The housing market certainly reacts to the monetary policy change,” says Lawrence Yun, the chief economist for the National Association of Realtors which just released the new existing home sales numbers.
The Federal Reserve has been raising interest rates to fight inflation. Mortgage rates anticipate future moves by the fed and bond markets more broadly, so they rose very sharply earlier this year — from around 3% to up above 6%.
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