Moreover, typical buyers who must obtain a mortgage to make the purchase are at a disadvantage: Cash offers accounted for more than one in every four sales, most of them hedge funds and other investment groups, Ryan said.
The recent run-up in mortgage rates will only make a purchase more of a challenge by raising the monthly cost of borrowing.
“The rise in prices the past few years had been partly offset by lower rates,” Ryan said. “A lot of first-time buyers will be pinched out of the market.”
Short-term lending rates have been near zero since early 2020, but the Federal Reserve has begun lifting them in an effort to blunt inflation. Mortgage rates don’t move in lockstep with the Fed, but they typically respond to a market in which borrowing is becoming more expensive.
The average mortgage rate for a 30-year fixed mortgage hit bottom at 2.65% last year before edging higher. As 2022 began, it was still only 3.11%, but by the end of this week, it was hovering near 5%.
That is still well below the historic average for mortgage rates. Between the late 1960s and 2009, the average mortgage rate was never below 5%, according to the Federal Reserve Bank of St. Louis.
More important is the supply of homes for sale, said Kristen Jones, owner and broker at Re/Max Around Atlanta. “Until that starts to move, I can’t say that interest rates, or any other economic factor, are having a significant impact on the housing market.”
March metro Atlanta home sales, compared with a year earlier
Number of sales: -11.0%
Number of listings: -5.4%
Median sales price: +20.1%
Median price, ten most expensive metro counties
Metro counties with most homes listed for sale
Median sales price, core metro counties
Metro counties with most homes sold
Source: Georgia Multiple Listing Service