How Mortgage Rates Are Driving Home Sales, and What’s Up With Foreclosures?

The Rush on Rates

Rising mortgage rates have made homeownership less affordable to some would-be buyers. Some people may assume this would lead to higher housing inventory, and therefore lower home prices. Yet, according to the National Association of REALTORS®, home prices continued to surge higher during the year’s first quarter — even as rates rose.

Real-estate agents explain this is because buyers were in a hurry. Many wanted to secure a deal on a home and lock in a rate before mortgage costs went up even further. For this reason, in addition to the typically busy spring season, the housing market remains active. At the same time, bidding wars are common due to elevated demand and historically-low housing stock.

Foreclosures Also Up

Digging deeper into housing-market trends, mortgage technology, data, and analytics provider Black Knight says active foreclosures were up by 7,000 in March, representing the first year-over-year increase in close to a decade. Analytics firm ATTOM notes foreclosures were up by 39% during the first three months of 2022 from the previous quarter, and rose 132% going back a full year.

Still, when trying to make sense of the broad trend, analysts note it’s worth pointing out that foreclosures are still low by historical standards. That may be connected to the moratorium on evictions during the pandemic, which allowed some homeowners to rebuild their finances.

Impact on Buyers and Sellers

While the housing market badly needs new inventory, industry watchers have their doubts foreclosures will do much to free up housing stock. They’re still at historically low levels and the legal process is lengthy. For now, demand from buyers continues to outpace available supply.

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