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How rising rates will impact home prices

Housing’s share of the economy rose above normal levels from November to January, despite mortgage rates surging 60 basis points at the time. Economists caution that there may be a lag to the impact of rising rates and particularly their effect on home prices. In an analysis, Goldman Sachs economists found that the median home price often drops 3 to 4 percent. 

That said, buyer demand is much stronger than supply at the moment and the economy and job growth are continuing to support the housing market. Many economists are skeptical whether mortgage rates will actually rise much more than they already have. A survey conducted by MarketWatch in December 2016 showed an average for rates of 4.5 percent throughout 2017, a 35 basis point increase from current readings. 

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