While last week’s mortgage rates hit highs not seen in 23 years, the latest rates released on Thursday are worse.

For the week ending Oct. 12, rates for 30-year fixed-rate loans averaged 7.57%, up from last week’s 7.49%, according to Freddie Mac.

Some experts fear this upward trend could spiral even higher, plunging the already sluggish housing market into a deeper freeze.

“Mortgage rates are heading toward 8%,” says Bright MLS Chief Economist Lisa Sturtevant. “And if the Fed raises rates again, they will almost surely pass that threshold this year.”

We’ll explain what this means by breaking down the latest statistics for both homebuyers and home sellers in our latest installment of “How’s the Housing Market This Week?“

Mortgage rates create a market ‘holding pattern’

These unforgiving mortgage rates have kept the housing market on standby mode for months now.

“Last year, the housing market was losing momentum with lows still to come,” says Realtor.com® data scientist Sabrina Speianu in her most recent analysis. “This year, it’s more settled into a stable holding pattern of lower sales activity, despite the possibility that we have not yet seen the peak for mortgage rates.”

The Federal Reserve’s ongoing fight against inflation appears to be in a sort of holding pattern, too. The latest consumer price index, out on Thursday, shows that September’s year-over-year inflation was 3.7%—the same as in August.

As for what happens next, all eyes remain on the Federal Reserve, which is slated to meet again from Oct. 31 to Nov. 1. If the Fed hikes rates, some think this will push mortgage rates into the 8% range. However, this outcome is not guaranteed. (The Fed’s rates and mortgage rates are distinct. But mortgage rates frequently respond to changes in the Fed’s policy.)

Home prices are stuck

Buyers who’ve been home shopping for a while now are all too familiar with high home prices not budging much from their perch.

Median home prices, which grew by 0.1% over last year for the week ending Oct. 7, have barely moved in the past few months. On an annual basis, listing prices have grown slightly, or remained flat, for the past 11 weeks.

With buyers waiting in the wings until mortgage rates fall, “it is likely that prices will continue in a holding pattern at levels similar to last year for the remainder of the fall season,” says Speianu.

Housing inventory remains low

A dearth of new inventory, which Speianu describes as “historically low,” has been a thorn in the housing market’s side for so long, it might have transcended holding pattern status and morphed into the new normal.

“For more than a year, we have seen a consistent decline in the number of newly listed homes compared to the same period in the previous year,” says Speianu.

New listings have cratered for the week ending Oct. 7 by 3.2% year over year, and overall inventory (a combination of new and old listings) declined by 2.4%.

The reason for such tight inventory remains steady as well: Many homeowners feel “locked in” by their existing low mortgage rates, unwilling to move and shoulder the high rates buyers face today.

A massive break in the pace of home sales

With so few homes to choose from, high prices, and eye-watering mortgage rates, one would think that the pace of home sales has slowed. Yet this is not the case.

For the week ending Oct. 7, homes spent one less day on the market compared with last year. (The typical home spent 48 days on the market this September.) This is the first time since July 2022 that a home was snapped up quicker than the same week a year prior.

“Despite affordability challenges causing a dip in the demand for homes, there’s still a pool of eager homebuyers looking for a good deal while navigating a low inventory of available homes,” concludes Speianu.

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