The rising mortgage rates aren’t scaring away homebuyers

What you need to know

• The number of pending home sales rose in October, as buyers reacted positively to the increased inventory and increased confidence about economic conditions.
• The number of home loan applications rose by 12% in one week. This is another indication that the demand for housing has increased.
• The mortgage rate dropped for the second consecutive week last week. Potential buyers are still optimistic.

A pair of Wednesday reports showed that more house buyers are buying homes. The housing market is improving as the inventory grows and people become more confident about the economy.

The National Association of Realtors Pending Home Sales Index in October was 2% greater than the index in September. The increase is higher than that predicted by economists interviewed by The Wall Street Journal or Dow Jones Newswires.  

The pending home sale rate is higher for the second month in a row than it was at this time last year. Home sales last fall were slowed by high mortgage rates and a low inventory of housing. These trends are changing now.

“Homebuying momentum is building after nearly two years of suppressed home sales,” Lawrence Yun is the chief economist at NAR. 

Mortgage rates fall for the first time in two months

Today’s report also showed an increased level of homebuying.

Mortgage Bankers’ Association (MBA), according to its data, showed that the demand for mortgages increased by 6.3% during the week of November 22. Applications for home buying also rose by 12 percent.

Demand has risen as 30-year fixed rate mortgage rates have fallen for the first two-month period to 6.86%. After dipping somewhat this summer, mortgage rates have increased in recent weeks despite the Federal Reserve cutting its influential federal funds interest rate. 

“With the growth in for-sale inventory and signs that the economy remains strong, buyers have remained in the market even though rates have increased recently,” Joel Kan is MBA Vice President and Deputy Chief Economist.

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