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Home buyers are seeing a break from rising mortgage rates as the bond market finds its equilibrium, but that doesn’t mean most Americans will save money when they purchase property.

The 30-year fixed-rate mortgage averaged 2.98% for the week ending Nov. 10, down 11 basis points from the previous week, Freddie Mac FMCC, +3.64% reported Thursday. A year ago, the 30-year fixed-rate mortgage was averaging 2.84%.

The 15-year fixed-rate mortgage, meanwhile, sank eight basis points to an average of 2.27%. The 5-year Treasury-indexed adjustable-rate mortgage averaged 2.53%, down one basis point from the previous week.

“Despite the re-acceleration of economic growth, the recent bond rally drove mortgage rates down for the second consecutive week,” Freddie Mac chief economist Sam Khater said in the report. “These low mortgage rates, combined with the tailwind of first-time homebuyers entering the market, means that purchase demand will remain strong into next year.”

But as Khater cautioned, affordability concerns remain for home buyers. And that has everything to do with rising home prices.

The median sale price for single-family existing homes increased during the third quarter in 99% of the nearly 200 markets that the National Association of Realtors tracks through its quarterly Metropolitan Median Area Prices and Affordability Index. And in 78% of markets, home prices rose by double digits, percentagewise.

The top markets for price increases over the past year were Austin, Texas (up 33.5%), Naples, Fla. (up 32%), Boise, Idaho (up 31.5%), Ocala, Fla. (up 29.7%) and Punta Gorda, Fla. (up 27.5%).

Nationwide, the average monthly mortgage payment for 30-year loan on an existing single-family home that was financed with a 20% down payment was $1,214, up more than $150 from last year.

“For the third quarter – and for 2021 as a whole – home affordability declined for many potential buyers,” Lawrence Yun, chief economist for National Association of Realtors, said in the report. “While the higher prices made it extremely difficult for typical families to afford a home, in some cases the historically-low mortgage rates helped offset the asking price.”

However, Yun, like many other real-estate economists, expects mortgage rates will rise in the coming months and beyond. Higher rates, combined with a potential increase in the number of homes on the market, should slow the pace of home-price growth, he suggested.

Source: This post first appeared on http://marketwatch.com/

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