“Geopolitical tensions caused U.S. Treasury yields to recede this week as investors moved to the safety of bonds, leading to a drop in mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. “While inflationary pressures remain, the cascading impacts of the war in Ukraine have created market uncertainty. Consequently, rates are expected to stay low in the short term but will likely increase in the coming months.”

More than three-quarters of Americans who have a yard say the family yard space is one of the most important parts of their home, according to a poll of 1,700 consumers by the TurfMutt Foundation. Since the pandemic began, homeowners are showing more appreciation for their yards and spending more time in them, the poll found.

Despite this week’s decline, mortgage rates have risen by more than a full percentage point over the last six months, says Sam Khater, Freddie Mac’s chief economist. “Overall economic growth remains strong, but rising inflation is already impacting consumer sentiment, which has markedly declined in recent months,” Khater says. “As we enter the spring home buying season with higher mortgage rates and continued low inventory, we expect home price growth to remain firm before cooling off later this year.”

Townhouses are making a comeback in residential real estate. Buyers searching for affordability are showing more interest in townhomes, particularly first-time home buyers.

Townhouse construction climbed 28% in 2021, according to data from the National Association of Home Builders. Demand for medium-density neighborhoods is rebounding after lagging in 2020 during the beginning of the pandemic, the NAHB reports.

“Mortgage rates jumped again due to high inflation and stronger than expected consumer spending,” says Sam Khater, Freddie Mac’s chief economist. “The 30-year fixed-rate mortgage is nearing four percent, reaching highs we have not seen since May 2019. As rates and house prices rise, affordability has become a substantial hurdle for potential home buyers, especially as inflation threatens to place a strain on consumer budgets.”

Lumber prices are climbing once again, adding thousands of dollars to the cost of a new home. Builders and consumers thought relief had arrived when the price of lumber started to fall late last year, after soaring to record highs earlier in the year. But starting in December 2021, lumber prices again started to increase.

Lumber prices are about triple their average pre-pandemic levels, reports Random Lengths, a lumber industry news site.

Mortgage rates continue to rise and are nearly a full percentage point higher than a year ago. House hunters should brace themselves for rates near 4% before the end of the year, economists say. “The normalization of the economy continues as mortgage rates jumped to the highest level since the emergence of the pandemic,” says Sam Khater, Freddie Mac’s chief economist. “Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand.”