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Housing Market Shrugging Off Rise in Mortgage Rates
Shalia Dewan / The New York Times / June 25, 2013
Mortgage rates may be inching up, but they have not put a damper on the American housing market’s rebound.
The Standard & Poor’s Case-Shiller home price index on Tuesday showed a 12 percent increase in prices in 20 cities from April 2012 to April 2013, the largest gain since early 2006, when home values began to level off in advance of the market collapse. The rate of new-home sales also picked up to its quickest pace since July 2008.
The gains added to months of stronger showings in housing, a market that can infuse the economy with spending on big-ticket items like furniture and dishwashers. But the data released on Tuesday covered a period before comments last week by Ben S. Bernanke, the chairman of the Federal Reserve, caused a further jump in interest rates, raising fears that the market’s momentum could stall.
On Tuesday, many housing experts shrugged off that concern, noting that the effect of a single factor like mortgage rates would be tempered by other forces like prices, wages and changes in employment. Moreover, any rise in interest rates could cut both ways, with some potential buyers encouraged to try to make a deal sooner to get ahead of further increases.
For now, though, the biggest factor in the market, real estate agents say, is a low number of homes for sale, and that did not change after the Fed’s announcement.
“For our low-$100,000 buyer, it’s almost impossible to find a house right now,” said Renae Jackson, an agent in Houston, recounting a flurry of bidding wars. She acknowledged that if mortgage rates increased too much it would cause a pullback, but said she believed “whoever it is” that controls interest rates would be cautious.