US Mortgage Rates Hit 7.5% Post-FOMC Hike, Cooling Demand in Key Markets like Houston

The global real estate landscape continues to diverge, with some markets experiencing significant headwinds while others maintain momentum. In the United States, mortgage rates have become a central challenge, spiking to approximately 7.5% following the Federal Open Market Committee's September rate adjustment. This upward pressure on borrowing costs is evident in markets like Houston, where home sales declined 5.7% year-over-year, despite average home prices seeing a modest 0.7% increase to $421,311 in September.

Globally, a recent UBS analysis, released on October 16, reveals that residential property prices across 23 major cities increased by a mere 0.5% in real terms over the past year, indicating a widespread stagnation. However, exceptions exist, with Seoul experiencing a robust real house-price growth exceeding 10%, fueled by the AI-chip boom. Conversely, cities like London saw a 1% year-on-year decline in real terms, contributing to a 15% drop since 2021. Germany's Frankfurt and Munich also registered real-term drops of nearly 4%. The UK's average 5-year fixed-rate mortgage has reached 6%, further dampening activity. Meanwhile, Canada's Vancouver and Toronto observed 10% real declines, partly due to foreign buyer restrictions. The broader US market saw existing-home sales rise 1.5% from August to September, yet remain down 2.2% annually, with inventory up 4.6% year-over-year to 1.60 million units.