Some home buyers are giving up hope that mortgage rates will fall

• X
• Email
• Reddit
• SMS

The housing market hasn’t shaken off its slump the way some anticipated this spring, as higher-than-expected mortgage rates, high inflation and widespread job insecurity have made many would-be buyers hesitate.

A common refrain from housing analysts and real estate agents is that the situation would be better if the U.S. war in Iran ended. Then oil prices, inflation and yields on bonds would come down, leading to lower mortgage rates and greater consumer confidence.

But without any certainty on that score, how should people eyeing a move make sense of the housing market – and when to wade in?

Analysts say not to count on mortgage rates coming down this year in a significant way.

The average rate on a 30-year fixed-rate mortgage rose above 6.5% last week, according to Freddie Mac. Mortgage News Daily calculated an even higher figure: 6.75%. Across indexes, rates have gone up more than half a point since the start of the Iran war.

“Right now, our internal forecast has rates staying in the 6s (all year),” Zillow chief economist Mischa Fisher said. “It really depends on how long the energy price shock lasts.”

The rate climb may be prompting some people to buy homes now in anticipation of possible further increases, Fisher said. “People are saying: the direction has turned, and I should get on it before they rise higher,” he said.

He said rate fluctuations, though, make far less difference than the fact that home prices have soared since 2019, and incomes haven’t kept up. But that’s improving, he said, as price growth flattens and inflation pushes wages higher.

“Obviously, if you raise gas prices and you raise mortgage rates, it’s not going to help people. But if you’re buying in this market, you’re already suffering through that shock and saying, ‘OK, I still want to own a home,’” Fisher said.

Bob Anderson, 66, is among those who says he’s ready, despite higher mortgage rates and broader financial pressures. He’ll close on a home in a Detroit suburb next month for a little over $200,000.

“I just tell myself: Keep working, keep working harder,” Anderson said. “I’m nervous. I will admit I’m a little stressed.”

He acknowledges that he is already working practically around the clock. Starting at 5 a.m., he stocks shelves at a grocery store. And at night at this time of year, he draws caricatures at after-prom parties. He figures the $350 difference between his rent and his new mortgage amounts to one more good caricature gig a month.

“You’ve got buyers who are really not waiting for perfect conditions,” said Century 21 CEO Mike Miedler, who noted that pending home sales rose 1.4% from March to April and 3.2% year over year, according to the National Association of Realtors. “Most buyers, if they feel secure in their jobs and they’ve planned for this, they’re going to hop in.”

Michael Fratantoni, chief economist for the Mortgage Bankers Association, assessed that buyers may be more sensitive to the fluctuating rate than some experts give them credit for. His organization reports that the number of mortgage applications for home purchases has been decreasing.

“These rates (are) probably enough to cause some people to pause,” he said. “An informed potential home buyer has a good understanding of where rates have been recently.”

Some home buyers who had been waiting for better rates are no longer willing to sit on the sidelines.

“I’ve been watching mortgage rates for the past five years. … I’m interested in mortgage rates,” said Ben Bianco, 35. “But buying a house is such a big life decision. I couldn’t imagine if it was based on the interest rate timing.”

Bianco and his wife, Anastasia, paused their house search when they lost their jobs as contractors for USAID in the first weeks of the Trump administration. They started looking with urgency again when their rent spiked this year. They closed on a $625,000, three-bedroom house in Silver Spring, Maryland, this month.

“When it comes down to it, I’ll take whatever rate the lender is giving me,” Bianco said. “When you see your dream house, when you see that perfect backyard that your son is going to play in.”

Some buyers may hope to refinance later, assuming rates will come down at some point while they live there.

Bill Dallas, a longtime mortgage lender who now consults for other companies, advises against waiting to purchase a home even if global events turn around. “Let’s just say God comes down and he solves all these geopolitical issues. Kevin Warsh is in [as the Federal Reserve chair] and he lowers interest rates. What’s going to happen to home prices?”

When buyers have more money to spend, prices will go up, Dallas said. “If you’re a buyer, when should you buy? You should buy when home prices go down, not when they’re going up. Get out there and buy.”

Local journalism is essential.

Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are tax deductible.

Meet Our Journalists

• Jesse Tinsley

  Meet Jesse Tinsley. As a certified drone pilot, this veteran Spokesman-Review photographer often can be seen capturing beautiful aerial photographs of our region. Sometimes though, the job requires getting down with the dogs.

• Jim Meehan

  Jim Meehan is no stranger to Zag Nation. As the lead writer covering the Gonzaga men’s basketball team, he tells the stories behind the game and gets fans a bit closer to their favorite players.

• Molly Quinn

  There is no artist in Spokane like Molly Quinn. Her whimsical style is instantly recognizable to readers of The Spokesman-Review. She has painted gorgeous illustrations that instantly elevate the journalism accompanying it. She brings to life the stories that defy photography. She makes our pages better.

• Rob Curley

  Spokesman-Review editor Rob Curley loves to talk with people and learn about their lives, whether it's a best-selling author or a stranger he meets downtown on his walk to lunch. It's that inquisitive nature combined with a playful sense of storytelling that helps make our newspaper different than most.

Subscribe now to get breaking news alerts in your email inbox

Get breaking news delivered to your inbox as it happens.

Top Stories in Business

Fed’s Bowman says too soon to judge inflation impact of Iran war

• Meta to slash thousands more Bay Area jobs

• 'You need further increases': Southwest CEO indicates that flight prices may stick after Iran conflict spiked fuel costs

• Oil prices fall as U.S. and Iran edge closer to agreement

Building dignity through local work today

Dignified Workday is a rapidly growing low-barrier employment program in Spokane that is reshaping how the community supports individuals experiencing homelessness and instability.