Mortgage rates near 7 percent as housing market keeps cooling

Becky Enrico-Crum spent much of the pandemic racing to keep up as aspiring homeowners flocked to Idaho. But toward the end of this summer, the president of Boise Regional Realtors felt the frenzy finally ease up.

Prices in the area dropped 4.4 percent between July and August, though they were up 6.6 percent from 2021. Homes now last weeks on the market, as opposed to days. Her clients don't have to duke it out in fierce bidding wars or scramble to put in all-cash offers.

"We aren't crashing; we're leveling out," Enrico-Crum said. "We're just trying to find out what that level price is. That's what everybody is trying to figure out."

The long-awaited shift - from white-hot housing market to something more normal - is playing out across the country as mortgage rates escalate to the highest levels in 20 years, pushed along partly by the Federal Reserve's moves to slow down the economy and bring down inflation. The average rate for a 30-year fixed mortgage, the most popular home-loan product, has more than doubled in a year, and many lenders are quoting over 7 percent for such loans. Data to be released Thursday morning by Freddie Mac could also show mortgage rates cresting above 7 percent for the first time since April 2002. A year ago, it was 3.01 percent.

The housing market has been cooling ever since the Fed began raising rates this spring. And it is clearly cooling faster as rates push higher. U.S. home prices slid in July compared to June, marking the first month-to-month decline since January 2019, according to the closely watched S&P CoreLogic Case-Shiller National Home Price Index. In August, existing-home sales fell for the seventh straight month to the lowest level since early pandemic lockdowns, according to the National Association of Realtors. Sales fell 0.4 percent from July to August and 19.9 percent...