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Charted: The U.S. Mortgage Rate vs. Existing Home Sales



chart showing the rising u.s. mortgage rate from 2013-2023

The U.S. Mortgage Rate vs. Existing Home Sales

The U.S. 30-year fixed-rate mortgage has reached its highest level since 2002.

Coupled with rising home prices and a constrained housing inventory, U.S. housing affordability is now at its lowest point since 1989, according to the National Association of Realtors.

In the graphic above, we take a closer look at how the U.S. 30-year fixed-rate mortgage has evolved since 2013 against the backdrop of existing home sales, using data from both Freddie Mac and Trading Economics.

A Decade in Review: U.S. 30-Year Fixed-Rate Mortgages

Due to the stability and predictability they offer, fixed-rate mortgages remain very popular among American homebuyers. In 2021, 30-year fixed-rate mortgages made up 70% of all issued mortgages in the country.

Let’s take a look at how U.S. 30-year mortgage rates have evolved through the years.

YearAverage 30-Year Fixed-Rate Mortgage
2023 (Year-to-Date)6.65%

In the last few years alone, Americans have seen 30-year fixed-rate mortgages hit their lowest point in U.S. history—2.65% in January 2021—as well as skyrocket to their current rate of 7.31% (as of October 3, 2023.)

Naturally, this surge may leave many people wondering about the reasons behind this drastic change and whether they will drop any time soon.

Why Do Mortgage Rates Rise?

Mortgage rates rise in response to various economic indicators and policy changes.

Over the years, factors such as shifts in the Federal Reserve’s monetary policy, inflation concerns, the state of the bond market, and fluctuations in economic growth have all played roles in influencing mortgage rates.

2023 is no different, with many different economic and global events at play. It’s also notable that these high mortgage rates are affecting home sales in the U.S., specifically with existing home sales taking a dip while new home sales subtly rise.

new vs. existing home sales in the U.S.

This change in dynamics is occurring as homeowners with low mortgage rates hesitate to sell their homes and get back in the market amidst high mortgage rates. In turn, demand from buyers is increasing new home sales and pushing prices even higher.

What’s In Store for U.S. Mortgage Rates?

U.S. mortgage rates remain above 7% for the time being. However, experts suggest that rates may have already peaked and will likely start to fall in the coming months as recession fears subside and the economy regains its momentum.

The Mortgage Bankers Association estimates that the U.S. 30-year fixed-rate mortgage will fall to 6.3% by the end of 2023 and 5.4% by the end of 2024. Based on these predictions, it’s likely that the rates that characterized 2020 and 2021 will not be returning for some time to come, despite their downward trend.

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Visualizing the Rise of the U.S. Dollar Since the 19th Century

This animated graphic shows the U.S. dollar, the world’s primary reserve currency, as a share of foreign reserves since 1900.



Visualizing the Rise and Fall) of the U.S. Dollar

Visualizing the Rise of the U.S. Dollar Since the 19th Century

As the world’s reserve currency, the U.S. dollar made up 58.4% of foreign reserves held by central banks in 2022, falling near 25-year lows.

Today, emerging countries are slowly decoupling from the greenback, with foreign reserves shifting to currencies like the Chinese yuan.

At the same time, the steep appreciation of the U.S. dollar is leading countries to sell their U.S. foreign reserves to help prop up their currencies, in turn buying currencies such as the Australian and Canadian dollars to help generate higher yields.

The above animated graphic from James Eagle shows the rapid ascent of the U.S. dollar over the last century, and its gradual decline in recent years.

Dollar Dominance: A Brief History

In 1944, the U.S. dollar became the world’s reserve currency under the Bretton Woods Agreement. Over the first half of the century, the U.S. ran budget surpluses while increasing trade and economic ties with war-torn countries, expanding its influence as the world’s store of value.

Later through the 1960s, the U.S. dollar share of global foreign reserves rapidly increased as political allies stockpiled the dollar.

By 2000, dollar dominance hit a peak of 71% of global reserves. With the creation of the European Union a year earlier, countries such as China began increasing the share of euros in reserves. Between 2000 and 2005, the share of the dollar in China’s foreign exchange reserves fell by an estimated 15 percentage points.

The dollar began a long rally after the global financial crisis, which drove central banks to cut their dollar reserves to help bolster their currencies.

Fast-forward to today, and dollar reserves have fallen roughly 13 percentage points from their historical peak.

The State of the World’s Reserve Currency

In 2022, 16% of Russia’s export transactions were in yuan, up from almost nothing before the war. Brazil and Argentina have also begun adopting the Chinese currency for trade or reserve purposes. Still, the U.S. dollar makes up 80% of Brazil’s reserves.

Yet while the U.S. dollar has decreased in share of foreign reserves, it still has an immense influence in the world economy.

The majority of trade is invoiced in the U.S. dollar globally, a trend that has stayed fairly consistent over many decades. Between 1999-2019, 74% of trade in Asia was invoiced in dollars and in the Americas, it made up 96% of all invoicing.

Furthermore, almost 90% of foreign exchange transactions involve the U.S. dollar thanks to its liquidity.

However, countries are increasingly finding alternative options than the dollar. Today, Western businesses have begun settling trade with China in renminbi. Looking further ahead, digital currencies could provide options that don’t include the U.S. dollar.

Even more so, if the U.S. share of global GDP continues to shrink, the shift to a multipolar system could progress over this century.

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