Mortgage rates rose significantly this week, due to inflation that was higher than expected. Following the upward trend of the 10-year Treasury yield, the 30-year fixed mortgage rate moved up to 3.10% from 2.98% the previous week.
In the meantime, the unemployment rate is back below 5%. In a sign of confidence in the labor market, the number of Americans quitting their jobs reached new record highs. In the construction industry, while the U.S. suffers from a severe housing undersupply, 183,000 people left their jobs in September. This is a 24% increase compared to a year earlier. Due to persistent elevated prices and labor woes, homebuilders weren’t able to increase housing in October. Nevertheless, it’s promising to see that more homes have been built than compared to a year earlier. As supply chain disruptions will likely ease later this year, construction is expected to increase further. NAR forecasts housing starts to reach 1.67 million units in the year ahead. Meanwhile, mortgage rates will continue to rise, reaching 3.5% by the middle of 2022. With more homes to hit the market and higher mortgage rates, expect the housing market to slow down in 2022 but remain above the pre-pandemic level.