Home prices may have shown slight signs of decline in some overheated markets, but the cost of buying a home has risen once again, this time affecting monthly payments. The average 30-year fixed-rate mortgage, as reported by Freddie Mac, has climbed to 6.81%, with even borrowers possessing good credit scores now facing rates above 7%. This increase is attributed to a resilient U.S. economy, low unemployment, a thriving stock market, and the potential for further interest rate hikes by the Federal Reserve to combat inflation. The soaring prices of homes present a challenge. While a 7% mortgage rate may not be historically unusual, the problem lies in the current home prices, which have reached the range of $400,000. This figure was more manageable when mortgage rates were around 3%, but it has become a heavier burden with rates at 7%. The scarcity of available homes for sale further intensifies competition among a limited number of buyers who can afford the substantial monthly payments, pricing many prospective buyers out of the market.
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