WASHINGTON —

The Federal Reserve hiked its benchmark lending rate this week for the seventh time this year, capping a year of intense pressure on the housing market that pushed mortgage rates above 7% for the first time since 2002.

But now that the Fed has signaled a softer approach to cooling the economy instead of rolling out bumper rate hikes, potential home buyers are left to wonder: Will mortgage rates come back down? Or have buyers missed their chance?

No one knows exactly where mortgage rates will go in the months ahead. But most experts agree that we have seen the end of 3% mortgages for some time.

Mortgage rates have run up so far and so fast this year that many would-be homebuyers can no longer afford to buy a home. At the end of 2022, when rates were at 3%, few predicted that just a year later rates around this week’s 6.33% would come as a relief, having dropped from over 7%.

After starting the year at an average 3.22%, according to Freddie Mac, the 30-year fixed-rate mortgage took off last spring as the Federal Reserve embarked on a historic campaign to battle decades-high inflation by raising interest rates. By fall, mortgage rates had more than doubled, eventually topping 7% in October. Rates have receded slightly in recent weeks, but loans are still expensive — especially compared to the historically low rates buyers were getting during the pandemic.

Home shoppers have watched their buying power evaporate, with higher rates adding hundreds of dollars onto what they would pay each month.

High mortgage rates remain the primary impediment to home buying, according to a recent buyer and seller sentiment survey conducted by Fannie Mae. Homebuying and home-selling sentiment are both significantly lower than they were last year.

Based on the survey, people in the real estate market continue to expect mortgage rates to rise but home prices to decline, said Doug Duncan, Fannie Mae senior vice president and chief economist.

He said he expects mortgage demand to be dampened by affordability challenges, while “homeowners with significantly lower-than-current mortgage rates may be discouraged from listing their property and potentially taking on a new, much higher mortgage rate.”

Is this the new normal?

While the Fed’s rate hikes are expected to continue, many analysts anticipate they will be smaller than the recent bout of three-quarter-point hikes and will start to taper off as inflation starts to cool, which should mean mortgage rates will likely come down too.

The Fed does not set the interest rates borrowers pay on mortgages directly. But its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasury bonds, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.

If rates do drop, just how low will they go?

“If inflation continues to decelerate over the next several months, mortgage rates will likely stabilize below 7%,” said Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors. “That’s still double the previous year’s rate, but it’s better than an 8% rate, which is the historical average for the 30-year fixed mortgage.”

Looking ahead, Melissa Cohn, regional vice president at William Raveis Mortgage, said buyers should expect rates to level off in 2023 around where they were in the years before the pandemic — around 4% or 5%.

“We had an active and healthy real estate market then,” she said.

But Cohn said she does not expect a “meaningful” decline in mortgage rates until the third or fourth quarter of 2023. “Mortgage rates will drop a bit in December, we’ll see a brief flurry of activity, but there are likely to be more increases in the new year.”

And don’t expect to see rates drop at the same speed at which they rose this year, she said.

“We have to remember mortgage rates come down much slower than they go up,” said Cohn. “Banks will want to see proof that rates are meaningfully coming down and not a one-shot wonder.”

The weekly swings in mortgage rates this year have been about three times the size of those seen in a typical year, said Danielle Hale, chief economist at Realtor.com. The Fed’s extra-large rate hikes aren’t the only thing causing that.

Economic uncertainty is creating a larger gap or “spread” between the 10-year Treasury yield and mortgage rates. Typically, mortgage rates are about two percentage points above the 10-year Treasury yield, but recently the gap has been wider.

The main driver of the widening spread is greater interest rate risk, according to a recent report from the Urban Institute.

“The uncertainty about the effects of Fed policy to date and about the trajectory of future policy has resulted in large movements in interest rates,” wrote Laurie Goodman and Michael Neal, the report’s authors.

Consumer mortgages are packaged and sold off to investors. The higher myeortgage rates are, the more money investors can make. But as rates fall, more homeowners will choose to prepay their mortgages or refinance, making the loans less attractive to investors.

“Volatility increases the level of mortgage rates, compared to Treasury rates, because of the prepayment option,” said Chester Spatt, professor of finance at Carnegie Mellon University’s Tepper School of Business. “If you’re in a new loan at 7% and rates go to 6%, you may choose to prepay and refinance into a lower rate.”

It is abnormal to have such a large spread, said Lawrence Yun, chief economist for NAR, adding that other times when the spread was wider were during the 2008 financial crisis and the early days of the pandemic.

“Hopefully this large spread will dissipate by the spring home buying season,” he said. “If so, maybe buyers will face mortgage rates in the 5’s.”

What buyers can expect

Lisa Sturtevant, chief economist at Bright MLS, a multiple listing service in the mid-Atlantic region, also expects mortgage rates to fall further in 2023, but she doesn’t expect them to drop quickly.

“We were in unprecedented territory with rates under 3%,” she said. “There is no reason to suggest we will be back there. But they will be down from where we’ve been.”

“Housing market activity will continue to be relatively sluggish — even if mortgage rates do begin to come down — since so many existing homeowners are locked into sub-3% loans and will still not be eager to move into a higher rate,” she said.

As a result, the inventory of available homes for sale will remain tight into 2023. In many markets this could guard against prices dropping by a significant amount.

“Prospective buyers may be tempted to try to ‘time’ rates to jump into the market when rates dip,” she said. “But timing rates is difficult.”

Instead, would-be buyers should shop around, getting quotes from multiple lenders, including different types like a large national bank, an online lender or a community bank or credit union.

“There is a lot of variability in rates, terms, and mortgage products in this changing market,” Sturtevant said. “It is more important than ever that buyers compare offers from different lenders to find the financing that works best for them.”

The National Association of Realtors sees signs that the housing market could normalize in the new year.

Even though interest rates are rising, they say rates will still stay historically low — and that comes with perks.

"Interest rates will lock in for the next 30 years and (buyers) know exactly what your payments are going to be," said Jessica Lautz with the National Association of Realtors. "If you are renting right now, your rent is likely to increase next year, and that's going to stay, along with inflationary pressure. That's probably going to increase as landlords know that they can really increase that rent, and that's going to be difficult."

The National Association of Realtors predicts more inventory coming to the market next year. That could help slow down rising prices.

The association says the most important thing potential buyers need to know is how much to save and have for closing costs and down payments. Buyers should also track the fundamental changes brought on by the pandemic that can allow them to look for properties in less expensive areas.

"The other big thing that's different is the idea of what people want in their home, because CEOs are allowing that flexibility for remote work, and that's going to continue for the foreseeable future — at least a hybrid schedule that allows buyers to look at overlooked areas that they probably counted out in the past," Lautz said.

COWETA, Okla. — Late Sunday night, a possible tornado touched down in Coweta, Oklahoma, leaving behind damage throughout its path.

The tornado hit the city around 10:45 p.m. near Coweta High School.

Went back into our KJRH radar data and this shows the tornado approaching the Coweta area, going through Coweta, then the rotation decreased before 11p. #2News #OkWx pic.twitter.com/x3uLpVnX2m

— Brandon Wholey KJRH (@BrandonWholey) October 11, 2021

The storm reportedly damaged several homes near the high school, as well as the school itself. Reported damages include fallen tree limbs, fallen power lines, and debris found in yards across Coweta.

Emergency crews arrived in Coweta early Monday morning and are responding to the damage.

Coweta Public Schools also canceled in-person and virtual classes scheduled for the week to assess the damage done in the area.

2 News Oklahoma

The Phillips 66 gas station across the street from the school had damage to its roof after the storm rolled through. It was closed at the time the storm hit.

The City of Coweta confirms there are no injuries or fatalities that have been reported following the storms on Sunday night.

Power lines are still being repaired at this time.

Senior meteorologist with the National Weather Service in Tulsa, Chuck Hodges, told the Associated Press that crews would go out sometime Monday to assess and see how many tornadoes struck.

Another city in Oklahoma, Anadarko, also saw buildings damaged, the news outlet reported.

Baseball-sized hail was also reported in Norman.

Oklahoma wasn't the only state rocked with severe storms on Sunday.

According to the AP, severe weather also hit parts of Arkansas, Kansas, Missouri, and Texas with heavy rains, lightning, and wind.

The AP reported that survey crews were heading out to the southwestern part of the state to see if tornadoes supposedly caused damage.

In Kansas City, the NFL game between the Buffalo Bills and Chiefs was delayed for an hour due to lightning.

Ryan Love at KJRH first reported this story.

Last month, CNN's Before the Bell observed early signs that the red-hot global housing market could be starting to cool, as elevated prices appeared to hurt demand and home improvement spending eased.

It may have called the top too soon.

What's happening? U.S. home prices rose 18.6% in June compared to one year earlier and 16.8% versus May, according to the S&P Corelogic Case-Shiller Index released this week. In Phoenix, home prices jumped 29% year-over-year, while San Diego logged a 27% increase.

It's the third month in a row that the rate of house price increases set a record.

Video above: How the pandemic is keeping first-time homebuyers out of the market

Over in the United Kingdom, annual house price growth rose to 11% in August from 10.5% in July, according to new data from the Nationwide Building Society. Prices were up 2.1% month-on-month, the second-largest monthly gain in 15 years.

In Australia, while there are some signs the housing boom is moderating, home values still rose 1.5% in August, according to CoreLogic's latest Home Value Index. This rate of growth remains "well above average," CoreLogic said. The Reserve Bank of New Zealand, for its part, recently said house prices are "above sustainable levels."

What gives? Low borrowing costs and work-from-home upgrades are still supporting demand, even as some would-be buyers scoff at the scale of recent price increases.

Yet in a research note published this week, Goldman Sachs emphasized another factor.

"While low mortgage rates and the shift to working from home are also fueling housing demand, one under-appreciated reason for the price boom is that housing supply is very tight," the investment bank's economists said.

Price increases would normally feed a boom in the construction of new houses. But this hasn't materialized, thanks to raw material and labor shortages, as well as land regulations, according to Goldman.

"While the easing of temporary bottlenecks, such as material constraints and pandemic labor supply effects, should support an eventual recovery in supply ... more persistent constraints, such as land-use regulations, should continue to push up house prices in coming quarters, especially in the U.S., Canada, and UK," the bank predicted.

In short: Even if demand starts to waver, supply problems could bolster prices for some time.

Seventeen years ago, when Adriana Nichols moved from New York City to Los Angeles, she had a simple wish list: natural light (her New York studio apartment was dark), a yard and quiet neighbors. She managed to check everything off that list — and has spent nearly two decades living in the canyons of LA.

But today, as she looks to move again with her husband, her requirements have changed.

"It is profoundly a different wish list. A place where we have [running] water, where we are not... having bags packed in case fires evacuate us," said Nichols.

Video above: UN scientists signal “code red” warning about the future of climate change

In the last few years, Nichols says the California wildfires and poor air quality make living there unappealing — and downright scary.

But she says nearly every place she looks to move to is experiencing some element of climate risk. And a new analysis by Redfin, a real estate brokerage, reveals more Americans are moving into areas that face the highest climate risks than ever before.

Redfin analyzed data from ClimateCheck, a real estate climate risk assessment provider, and the U.S. Census, which showed that of the top 50 U.S. counties facing climate risks in heat, storms, drought, flood and fire — the majority saw an increase in population over the last five years.

Counties with homes facing the highest heat risk saw populations increase by an average of 4.7% over the last five years. Counties with homes facing high drought risk saw population growth of 3.5%, fire risk counties grew by 3%, flood 1.9%, and storm 0.4% over the last five years.

Meanwhile, places with relatively low climate risks have experienced population declines. The 50 counties with the lowest number of homes facing heat risk, for example, saw a population loss of 1.4% in the last five years, according to Redfin.

Counties around New York City and Chicago — both in states that were already leading the U.S. in population decline — only lost more people during the pandemic when homebuyers left metro areas in exodus, according to Redfin.

"Counterintuitively, people are moving to places with higher climate risk," said Daryl Fairweather, chief economist at Redfin. "And it seems like climate, although it's something that people care about, is at the bottom of the list or it's not the top priority."

For example, migration to Wasatch County, Utah, just outside Salt Lake City, is up almost 15% in the last five years. But Wasatch County has the third-highest fire risk in the U.S., with 96% of the homes there at risk, according to Redfin. The area became even more popular in the last year amid the pandemic, with people looking for affordability, more space and proximity to the outdoors.

"2020 saw some of the worst wildfires we've ever seen in Utah," said Ryan Aycock, agent and market manager for Redfin in Salt Lake City. "I don't necessarily believe that it's going to slow down the people moving into the area. It's still extremely affordable. It's still a very desirable place to live compared to a lot of places."

Affordability appears to be a big factor. Of the 50 counties with the largest share of homes facing high heat and storm risk, more than half had a median sale price below the national average of $315,000, Redfin found.

'Nothing will deter them'

Williamson County, Texas — part of the Austin metro area — has the highest heat risk in the U.S., yet it's the county with the biggest growth in population, at 16.3% since 2016, according to Redfin.

"People live in San Francisco or New York for the most part because it's where they are able to advance their careers the most, but now Austin is starting to rise as a tech hub and Austin has climate risk," said Fairweather.

It's also where people are buying their second homes — followed by Florida, where homebuyers are taking advantage of lower taxes, said Scott Durkin, CEO of Douglas Elliman.

"I think people continue to put [climate risk] in the back of their minds. I think there are people that will do anything to be on the ocean and the coast of Florida and nothing, nothing will deter them," said Durkin.

That's despite a record-breaking Atlantic hurricane season last year. And the National Oceanic and Atmospheric Administration (NOAA) is predicting a 60% chance of an above-normal hurricane season again this year, with Florida often a target.

Still, home sales in Palm Beach and Miami, are up 270% and 133%, respectively, since last year, according to Douglas Elliman.

During the pandemic-fueled red-hot housing market, many buyers waived home inspections to beat out other buyers, according to Durkin. However, in climate temperate areas, Durkin advises against that.

"If you've got something that has the elements of the strong weather or... subject to heavy winds and waves breaking and beach erosion, you have to really think twice. You may want to get the inspection on the way in before you even negotiate, just so you know for yourself," said Durkin.

As for Nichols, she wants to be out of her Los Angeles home in a matter of months.

"It's no longer a question of, 'Where do we want to live?' The question has become, 'Where can we live in relationship to what's happening there climate-wise?'" said Nichols.