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Illustration: Annelise Capossela/Axios

Warning bells about a slowdown in the white-hot housing market are ringing louder thanks to an uptick in mortgage rates and new weakness in pending home sales.

Why it matters: Mortgage rates plummeted in 2020 as the economy buckled under the pressure of the coronavirus pandemic. Now that trend is reversing, putting a damper on consumer appetite for homebuying.

What's happening: The rate on a 30-year fixed mortgage rose to 2.97%, which is its highest level since August 2020, according to Freddie Mac's weekly survey released Thursday.

  • Nationally, pending home sales fell 2.8% in January, well below the consensus forecast for no change. The metric, however, was 13% higher than a year ago.
  • Consumer confidence overall edged higher in February, but those living in big cities and rural areas are less optimistic about buying or selling their homes because of rising prices, according to the recent BofA US consumer confidence indicator.

What they're saying: "The housing sector is always sensitive to changes in mortgage rates so the latest data is showing a loss in momentum for overall housing,” Lawrence Yun, NAR's chief economist, tells Axios.

  • Home sales will continue to rise modestly but gains are likely to now be in the single digits versus the 20% upticks seen in late 2020, Yun says.
  • "Consumers need to understand the absolute low rates in mortgages — those days are over.”

Yes, but: Investors are also factoring in Fed chair Jerome Powell's comments this week emphasizing that the Fed is unlikely to tighten monetary policy solely in response to a stronger labor market, Danielle Hale, realtor.com chief economist, noted in a statement.

  • This may stem some of the upward pressure on interest rates in the upcoming weeks, she added.

Go deeper

Dion Rabouin, author of Markets
Feb 25, 2021 - Economy & Business

Powell remains unbothered by inflation despite yields surging

Data: Investing.com; Chart: Axios Visuals

U.S. Treasury yields rose to fresh highs on Wednesday, as Fed chair Jerome Powell made clear during his second day of Congressional testimony that the central bank had no plans to step in and put a lid on rising rates.

By the numbers: Yields on the benchmark 10-year note rose above 1.4% for the first time since February 2020 and the yield on the 30-year Treasury bond hit 2.28%, the highest since January 2020.

UN chief urges U.S. and China to fix "dysfunctional relationship"

United Nations Secretary-General Antonio Guterres during a Sept. 13 press conference in Geneva. Photo: Fabrice COFFRINI / Coffini/AFP via Getty Images

United Nations chief Antonio Guterres raised concerns in an interview with AP, published Monday, of another Cold War between the U.S. and China.

Why it matters: Guterres made the comments ahead of this week's UN General Assembly in New York. Guterres told AP the U.S.-U.K. deal to provide nuclear-powered submarines to Australia "is just one small piece of a more complex puzzle ... this completely dysfunctional relationship between China and the United States."

Updated 1 hour ago - Politics & Policy

FBI says human remains found in Wyoming likely Gabby Petito

Gabby Petito. Photo: FBI

Human remains found in Teton County, Wyoming, are "consistent with the description of" missing 22-year-old Gabby Petito, FBI Denver official Charles Jones said at a news conference Sunday.

Details: The cause of death had yet to be determined, but Jones said: "Full forensic identification has not been completed to confirm 100% that we found Gabby, but her family has been notified of this discovery." Authorities said they're continuing the search for her fiancé, Brian Laundrie.