Aug. 1 (Bloomberg) -- Mortgage rates in the U.S. rose for the first time in three weeks, resuming an upward climb that has begun to affect home sales.
The average rate for a 30-year fixed mortgage increased to 4.39 percent in the week ended today from 4.31 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate rose to 3.43 from 3.39 percent.
Mortgage rates for 30-year loans jumped to the highest level in two years last month on speculation that the Federal Reserve may begin to scale back its bond purchases. Rising rates are “a correcting force on the market” that will push more sellers to list their properties before buyer demand dwindles, according to Tim Ellis, an analyst at Seattle-based Redfin Corp., an online real estate brokerage.
Buyers competing for a small supply of homes have been pushing up prices at a pace that’s “just not sustainable” in certain markets, he said yesterday in a telephone interview. “As interest rates go up, a lot of sellers who were waiting are going to rush to put their homes on the market. So you’re going to see inventory climb and climb.”
Almost half of U.S. home sellers are concerned that interest rates will reduce demand for their properties, according to a July 19-21 survey by Redfin. That’s up from the second quarter, when 23 percent of the website’s users said they were concerned about rising rates.
In a sign that buyers are starting to hold back, contracts to purchase previously owned U.S. homes slipped 0.4 percent in June after climbing in May to the highest level since December 2006, the National Association of Realtors reported this week.
D.R. Horton Inc., the biggest U.S. homebuilder by revenue, said rising mortgage rates contributed to increased cancellations and a dropoff in traffic in June. Potential buyers were “a little bit shocked and disturbed” that rates had jumped so much after hovering near record lows the previous month, Donald Tomnitz, chief executive officer of the Fort Worth, Texas-based company, said last week on a conference call with investors.
The Mortgage Bankers Association’s index of home-loan applications fell for a seventh straight week in the period through July 26. The refinancing measure dropped 3.8 percent and the purchase gauge declined 3.8 percent to the lowest level since February, the Washington-based trade group said yesterday.
The 30-year average has climbed from a near-record low of 3.35 percent in early May. It’s still below the average of about 5.3 percent for the past 10 years, according to data compiled by Bloomberg.
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