Mortgage rates delivered yet another blow to homebuyers this week, remaining at levels not seen in 23 years.
The average rate on the 30-year fixed mortgage jumped to 7.57% this week from 7.49% a week prior, according to Freddie Mac. That is the ninth straight week rates remained over 7% and the highest level since the first week of December 2000, when the rate averaged 7.65%.
Elevated rates are now the biggest woe weighing on buyers who are priced out of the market or can’t find a property because homeowners don't want to sell. Their misery likely won’t abate soon as the likelihood increases that a high-rate environment is here to stay.
"For the fifth consecutive week, mortgage rates rose as ongoing market and geopolitical uncertainty continues to increase," said Sam Khater, Freddie Mac’s chief economist, said in a statement. "The good news is that the economy and incomes continue to grow at a solid pace, but the housing market remains fraught with significant affordability constraints. As a result, purchase demand remains at a three-decade low."
Read more: Mortgage rates at 20-year high: Is 2023 a good time to buy a house?
Buyers are bummed out by rates
High mortgage rates were the number one reason consumers felt disheartened about the market, supplanting home prices for the first time, according to Fannie Mae's latest survey on housing sentiment. The survey found 83% believe mortgage rates will stay at their current elevated level or rise further in the next 12 months.
That has distressed buyers, with 84% of respondents in Fannie Mae's survey saying now is a bad time to buy a home, the highest share on record.
In addition to high rates, home prices continue to rise because of limited inventory — homeowners don't want to sell and then buy in this high-rate environment, either. That's a bad combination for buyers, and one that might not improve anytime soon.
"Mortgage rates are expected to remain elevated for the time being," Hannah Jones, economic research analyst at Realtor.com, told Yahoo Finance. "It seems that [mortgage lock effect] is going to be the mode of operation until something shifts substantially, [such as] inflation has made big improvements."
Read more: How to buy a house as mortgage rates edge closer to 8%
On Thursday, the latest gauge for inflation showed that consumer prices grew 0.4% over last month and 3.7% over the prior year on a headline basis in September — with shelter costs as the largest contributor. That's down from August's 0.6% month-over-month increase and in line with the month's annual rise.
While both measures were slightly higher than economist forecasts, many Fed watchers don't expect the results to be enough to support another interest rate hike this year — a move that the three major real estate trade groups this week urged the Fed chair to avoid.
Read more: What the Fed's latest rate move means for mortgage rates and loans
However, central bank officials have recently doubled down on their calls for its benchmark rate to stay "higher for longer" and the minutes from the most recent Fed meeting showed the majority of Fed officials forecast one more hike this year. A surprisingly robust job market report last week also supports a higher-rate environment, which doesn't bode well for homebuyers.
"The robust employment picture just won't quit," Jonathan Miller, president and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm, said after last week's September jobs report. "It works against the housing sector, where sales continue to be pummeled by rising mortgage rates."
"The odds are rising for an 8% rate since the employment picture remains relatively robust despite the rising rate environment," Miller said.
Editor's note: A previous version of this story misstated the current mortgage rate. The correct rate is 7.57%.
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).