Mortgage rates top 7% for 1st time since 2002

The average rate on a 30-year home loan was 7.08 percent as of Thursday, up from 6.94 percent last week and 3.14 percent a year ago, mortgage buyer Freddie Mac reported.

This marked the first time since April 2002 that mortgage rates eclipsed 7 percent, Freddie Mac Chief Economist Sam Khater said in a news release.

People are facing “higher costs at every turn” amid ongoing inflation, and many potential homebuyers are waiting to see where the market ends up, “pushing demand and home prices further downward,” Khater said.

In Southern Nevada, higher mortgage rates have “shrunk the buyer pool,” which has led to increased inventory and, ultimately, lower sales prices, said Brandon Roberts, president of trade association Las Vegas Realtors.

Houses are still trading hands, though Roberts said sellers “have to be realistic” about their price and should offer incentives to buyers, such as covering closing costs.

During the pandemic’s sales frenzy, buyers often had to “settle for whatever they could get,” he noted. But the market changed quickly this year as interest rates marched higher.

“It was almost overnight,” said Roberts, broker with Signature Real Estate Group.

Not long ago, record-low mortgage rates fueled a homebuying spree in Las Vegas and across the nation. Sales prices hit new all-time highs practically every month, houses sold rapidly, buyers showered properties with offers and builders put house hunters on waiting lists.

But locally and nationally, buyers have been pumping the brakes for months as the Federal Reserve fights inflation with higher interest rates.

“As long as mortgage rates and prices remain high, buyers will be looking for a relief valve,” Hannah Jones, economic research analyst with listing site Realtor.com, wrote Thursday.

Buyers who “remain in the market may see lower prices and have some leverage,” but they will “have to be cognizant of how higher mortgage rates impact housing costs,” she added.

In Southern Nevada, sales totals have dropped sharply from year-ago levels, inventory has shot higher and sellers have increasingly slashed their prices.

On the resale side, buyers picked up 2,030 single-family homes in September, down 36.7 percent from the same month last year, while 8,121 houses were on the market without offers at the end of last month, up 134.5 percent from a year earlier, Las Vegas Realtors reported.

Single-family homes sold for a median price of $450,000 in September, unchanged from August after sliding for three consecutive months.

Meanwhile, 42 percent of Las Vegas-area home listings had a price drop in September, up from just 9.3 percent in February, according to listing site Zillow.

Roberts, the association president, said in a news release earlier this month that house prices had leveled off “at least for now” and that prices and sales had been declining since mortgage rates started rising.

“The good news for buyers is that it has been at least three years since we’ve had this many homes available for sale,” he said.

Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342. Follow @eli_segall on Twitter.