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Mortgage rates above 6.64% cloud near-term housing demand outlook

Housing purchase applications fell 7% week over week and 2% year over year after hawkish Fed messaging pushed rates slightly above 6.64%.

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Mortgage rates moved slightly above 6.64% following hawkish messaging from Federal Reserve members, increasing the risk that longer-duration borrowing costs could slow housing demand, HousingWire reports. Early demand signals are mixed, with HousingWire citing a double-negative print in purchase application data. Purchase apps slipped 7% week to week and 2% year to year, while pending sales totals remain higher than last year. HousingWire also notes that the number of negative year-over-year prints for purchase apps has been limited, with only the third such negative reading of the year, while weekly seasonality often brings week-to-week declines. Looking ahead, HousingWire says its view has centered on whether mortgage rates can remain below certain thresholds, including a forecast that would have required rates staying under 6.25% to support additional existing home sales. The outlet adds that housing demand typically shifts with the level of mortgage rates over the following 30 to 90 days for purchase apps and about 30 to 60 days for weekly pending home sales.

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