Autumn is typically known as the time of year when housing activity starts to slow down.Generally, home sales tend to be very robust in spring and summer, then begin to soften somewhat during the autumn and winter months.The slowdown begins in the fall because school is starting, and families with kids would rather not move during this time, he adds.
However, mortgage rates took their biggest leap in two months. It was only an eighth of a percentage point move, but enough to send a scare to a whole host of housing players: buyers, sellers, builders and homeowners. The average contract interest rate on the popular 30-year fixed mortgage is still historically very low, around 3.5 percent. The historical average for that rate is just more than 8 percent, and it has been as high as 18 percent. Still, a move higher is scary.
Higher mortgage rates make homebuying more expensive. No question. The move now could make some buyers want to get into a contract quickly before their costs rise. That, however, has always been a very short-term stimulus. Higher rates could also scare some sellers into lowering prices slightly, to sell before they lose potential buyers.
But even if the Federal Reserve raises its funds rate this month, mortgage rates may not move much higher. After the central bank made its first increase last December, mortgage rates moved up briefly, but then fell again.