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Surge in Mortgage Rates Threatens to Slow U.S. Housing Rally

  • Strong price gains may be tempered as financing costs climb
  • ‘It’s going to knock us out of the game,’ says one homebuyer

The pandemic housing rally is getting its first big test.

Mortgage rates rose in each of the past three weeks, driven by a bet that inflation will accelerate as the U.S. economy roars back this year. While borrowing costs are still near historic lows, the quick jump has already begun eroding the purchasing power that enabled buyers to push up home prices across the country in recent months.