30-year U.S. mortgage rate rises slightly as they approach 7%

Oct. 20 (UPI) -- The average U.S. 30-year fixed mortgage interest rate rose just 0.02 percentage point this week and is averaging 6.94%, according to Freddie Mac. Higher rates continue to lower housing market demand, observers said.

"The 30-year fixed-rate mortgage continues to remain just shy of 7% and is adversely impacting the housing market in the form of declining demand," Sam Khater, Freddie Mac's chief economist, said in a statement.

"Additionally, homebuilder confidence has dropped to half what it was just six months ago, and construction, particularly single-family residential construction, continues to slow down."

Even the 15-year fixed mortgage rate average, at 6.23%, is steep compared to recent years.

The National Association of Realtors said existing home sales dropped for the eighth consecutive month in September to a seasonally adjusted annual rate of 4.71 million. Sales fell 1.5% from August and 23.8% from the previous year.

"The housing sector continues to undergo an adjustment due to the continuous rise in interest rates, which eclipsed 6% for 30-year fixed mortgages in September and are now approaching 7%," association Chief Economist Lawrence Yun said in a statement.

"Expensive regions of the country are especially feeling the pinch and seeing larger declines in sales."

Home prices are still rising along with mortgage interest rates. The median U.S. home price in September was $384,800, an 8.4% increase from September 2021, according to the Realtors' group.

Housing inventory on the market in September stood at 1.25 million units, down 2.3% from August. The Realtors said unsold home inventory is at a 3.2 month supply at the current sales pace.

"Despite weaker sales, multiple offers are still occurring with more than a quarter of homes selling above list price due to limited inventory," Yun said.

"The current lack of supply underscores the vast contrast with the previous major market downturn from 2008 to 2010, when inventory levels were four times higher than they are today."