How high mortgage rates are affecting the local housing market
Mortgage rates are now at their highest level in two decades, with the average rate reaching 7.5 percent this week.
Some experts say it could soon reach 8 percent. Yet, home prices have remained unusually high.
"Interest rates are a problem, but if you had more units out there just on a numerical basis, it wouldn't be so much of problem," said realtor Bob Dandi.
Dandi says that's because of extremely limited supply.
More folks are holding onto mortgages with 3-percent interest rates or lower.
Nationwide, sales of previously owned homes fell 2.2% in July, and are down more than 16% compared to last year, according to the National Association of Realtors. The number of mortgage applications has also dropped to a 28-year low.
Meanwhile, the median price for an existing home this month was $406,700, nearly 2% higher than the same time last year.
"It's almost as if you're not selling your home, you're selling your mortgage rate. So people are extremely hesitant to do that," Dandi said.
Meaning, those brave enough to enter the market are still facing bidding wars, says realtor Jennifer Schimmel.
"We are seeing multiple offers especially in that price point that you know most are in, where you're looking at $200,000 to $400,000," Schimmel said.
The situation is also driving up interest in new homes. New single-family home purchases rose 4.4%.
"I have clients that they might be making offers on resale homes and they're losing out and losing out, and then they go the next option of looking at new construction homes," Schimmel said.
And with the future of rate hikes, and how long they'll last, uncertain, both experts say if you want to buy a new home and can afford it, go for it.
"If you're in the Lehigh Valley, it's hard for me to believe you're going to get hurt buying a home," Dandi said.