UNAFFORDABLE UTAH

Utah housing expert predicts pullback in activity because of mortgage rates

Jun 13, 2022, 6:16 PM | Updated: 8:19 pm

SALT LAKE CITY – An expert in Utah’s housing market expects that rising mortgage rates will cause a pullback in real estate activity and a slowdown in home price increases.

“That will have an effect, it will slow things down,” said James Wood, the Ivory-Boyer senior fellow at the University of Utah’s Kem C. Gardner Policy Institute.

Wood said the home price increases that Utah has experienced over the last five years were unsustainable.

“Frankly, we’ve had a very unhealthy housing market over the last several years—it’s just gone up too fast,” Wood said. “We’ve priced a lot of renters and new households out of homeownerships.”

Freddie Mac released the latest mortgage survey last Thursday and showed mortgage rates jumping ahead of inflation news and this week’s Federal Reserve meeting.

The Primary Mortgage Market Survey showed that the 30-year, fixed-rate mortgage now averages 5.23%, compared to 5.09% a week earlier.

Image preview

“After little movement, the last few weeks, mortgage rates rose again on the back of increased economic activity and incoming inflation data,” said Freddie Mac’s chief economist Sam Khater in a prepared statement.

The survey said at this time last year, the 30-year, fixed-rate mortgage averaged 2.96%

“The housing market is incredibly rate-sensitive, so as mortgage rates increase suddenly, demand again is pulling back,” Khater went on to say. “The material decline in purchase activity, combined with the rising supply of homes for sale, will cause a deceleration in price growth to more normal levels, providing some relief for buyers still interested in purchasing a home.”

So far this year, Wood says homes in Utah are only staying on the market for an average of six days, but he expects the market to retreat in terms of activity for the rest of the year.

“I don’t think we’re going to see housing prices drop, but I think we’re going to see a deceleration in price increases,” Wood said. “It’s been a hot market right up to this point, the first week or two in June, but it’s going to cool off with interest rates almost at six percent.”

Wood also said he’ll be watching new home construction closely since it that sector was already struggling with labor and building material shortages.

Stocks fell sharply on Monday ahead of this week’s Federal Reserve meeting as some analysts are predicting the Fed will raise interest rates more aggressively to control inflation.

KSL 5 TV Live

Unaffordable Utah

The cost of homeowner's insurance in Utah has risen by double digits since 2022, impacting both cur...

Daniel Woodruff

Cost of homeowner’s insurance in Utah up by double digits each year since 2022

Homeowner's insurance costs have risen by double-digit percentages for the last three years. The Utah insurance commissioner has concerns, and advice.

24 days ago

A Redfin sign listing a Utah home for sale....

Daniel Woodruff

Utah’s median home price rises to $500k despite high mortgage rates

Even with high mortgage rates, Utah's home prices are still going up, as the median price for a home in the state is $500,000.

29 days ago

A group of graduates at their ceremony....

Karah Brackin

AI and budgeting are the biggest challenges for newer graduates, experts say

With graduation season in full swing, the “real world” challenges graduates face may look a little different this year.

2 months ago

(FILE) Two signs advertising bedrooms for rent....

Daniel Woodruff

Rent costs are up nationally, but what about Utah?

While some aspects of inflation are cooling down, the cost of renting has continued rising.

2 months ago

KSL’s Matt Gephardt price shopped several items at traditional grocery stores and specialty food ...

Matt Gephardt

Gephardt Busts Inflation: Will shopping specialty food markets save you money?

To save money on your groceries, a specialty food market might not come to mind. But KSL Consumer Investigator Matt Gephardt found branching out to specialty food markets might help you bust some grocery inflation.

2 months ago

High food prices are squeezing Utah families, and going to the grocery store can be a frustrating e...

Daniel Woodruff

Is grocery shopping ‘frustrating and stressful’? Here are ways to stretch your dollars

High food prices are squeezing Utah families, and going to the grocery store can be a frustrating experience.

2 months ago

Sponsored Articles

young male technician is repairing a printer at office...

Les Olson

Unraveling the dilemma between leasing and buying office technology

Carefully weigh these pros and cons to make an informed decision that best suits your business growth and day-to-day operation. 

A kitchen in a modern farmhouse....

Lighting Design

A room-by-room lighting guide for your home

Bookmark this room-by-room lighting guide whenever you decide to upgrade your lighting or style a new home.

Photo courtesy of Artists of Ballet West...

Ballet West

The rising demand for ballet tickets: why they’re harder to get

Ballet West’s box office is experiencing demand they’ve never seen before, leaving many interested patrons unable to secure tickets they want.

Electrician repairing ceiling fan with lamps indoors...

Lighting Design

Stay cool this summer with ceiling fans

When used correctly, ceiling fans help circulate cool and warm air. They can also help you save on utilities.

Side view at diverse group of children sitting in row at school classroom and using laptops...

PC Laptops

5 internet safety tips for kids

Read these tips about internet safety for kids so that your children can use this tool for learning and discovery in positive ways.

Women hold card for scanning key card to access Photocopier Security system concept...

Les Olson

Why printer security should be top of mind for your business

Connected printers have vulnerable endpoints that are an easy target for cyber thieves. Protect your business with these tips.

Utah housing expert predicts pullback in activity because of mortgage rates