Mortgage rates have reached a 20-year high - and that's not the scariest part

The housing market is a scary place these days.
Ominous statements are the norm: "The Fed will push until something breaks." "Housing is in free fall". "It's going to be brutal." "It will end in tears."
Such doom and gloom can leave nervous homebuyers wondering if there is hope or reason to move forward. But if the COVID-19 pandemic has taught us anything, it's that things can change quickly—for better or for worse—which is why keeping an eye on the latest real estate statistics is a must to stay sane and ahead of the very near housing apocalypse.
Mortgage rates are at their highest level in 20 years
For the week ended October 27, the average 30-year fixed mortgage rate jumped to 7.08%. According to Freddie Mac, this is the first time this rate has broken the 7% mark in 20 years, since April 2002.
Try the numbers on how this affects housing affordability, and the picture becomes even scarier.
"Combined with rising home prices, higher mortgage rates have significantly increased the cost of monthly mortgage payments, up more than 70% from a year ago, and are hurting buyers' purchasing power," notes Realtor.com Chief Economist Danielle Hale. Recent analysis of emerging housing markets.
In September, house prices hovered around a national median of $427,250 - and in the week ending October 22, prices continued to rise by 13% compared to the corresponding week last year. That's down slightly from the previous week's 13.2% gain, but it's also the 43rd straight week of double-digit expansion.
"Growth in house prices moderated but remained at a double-digit rate, and along with higher rates, it left a big mark on the budgets of home buyers," Hale says in her review of the housing data this week. "With dwindling options for purchasing affordable homes, some buyers are looking elsewhere."
In other words, shoppers are casting their eyes even further afield for bargains. In fact, Hale adds that most buyers are now looking outside state lines.
An advantage to the increase in mortgage interest rates: more houses on the market
During the week ending October 22nd, although the number of new sellers entering the market was down 13% from a year earlier, the total housing inventory (of new and old listings) was up 36%. This is the biggest jump in the number of homes for sale seen in 16 weeks.
The reason so many homes are on the market is that home buyers simply can't afford what they used to be.
"Higher mortgage rates together with higher apartment prices have drastically reduced purchasing power, and with it sales activity," Hale says.
Many of these homes will remain on the market and collect more cobwebs than usual. While properties currently sit at a median of 50 days, in the week ended Oct. 22, they spent a full week on the market compared to a year earlier, a pace that has slowed for 13 straight weeks.
"For buyers, it may take a little longer to think about options, depending on your location," Hale says. "It may not be a buyer's market yet, but this trend is definitely more buyer-friendly."
In other words, nervous buyers embracing today's market may realize it's not quite as bad as legal scholars suggest.
Watch: 4 (mainly) new and enlightened reality of buying a house today