But Freddie Mac chief economist anticipates rates to "gently decline".
The popular 30-year fixed mortgage rate increased for the second week in a row, but housing industry experts are confident that interest rates will eventually ease this year.
Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage rose to 6.43% from 6.39% last week. On the other hand, the 15-year fixed mortgage rate averaged 5.71%, down from 5.76% a week ago.
"The 30-year fixed-rate mortgage increased modestly for the second straight week, but with the rate of inflation decelerating, rates should gently decline over the course of 2023," Freddie Mac chief economist Sam Khater said in the company's news release. "Incoming data suggest the housing market has stabilized from a sales and house price perspective. The prospect of lower mortgage rates for the remainder of the year should be welcome news to borrowers who are looking to purchase a home."
According to CoreLogic, annual home prices in February posted a 2% annual gain, down from 3.8% in January – marking the 10th consecutive month of decelerating home price growth.
"Nevertheless, compared to January, the index posted a first monthly gain in February, after seven months of decline, suggesting that home prices nationally have bottomed out," CoreLogic chief economist Selma Hepp explained. "Even in markets with the largest price drops since last year's peaks, such as San Francisco, home prices picked up pace in February. Still, the housing markets continue to vary across markets and price tiers, but lower mortgage rates and low inventories have been helpful in providing the floor for prices in markets where prices seemed to have nosedived following mortgage rate surge."
"The US home buyer remains acutely sensitive to interest rate movements as this latest data point indicates," added Indraneel Karlekar, global head of research and portfolio strategies at Principal Asset Management. "This suggests that the Fed's interest rate tightening is having some impact on consumer behavior."
"Although incoming data points to a slowdown in the US economy, markets continue to expect that the Fed will raise short-term rates at its next meeting, which have pushed Treasury yields somewhat higher," said Joel Kan, deputy chief economist of the Mortgage Bankers Association. "As a result of the higher yields, mortgage rates increased for the second straight week to their highest level in over a month, with the 30-year fixed rate now at 6.55%."