Rates for 30-year fixed-rate mortgages averaged 7.1% for the week ending April 18, up from 6.39% one year ago, according to data from Freddie Mac. This represents a breach of a psychological threshold not yet crossed this year and adds to issues plaguing the housing market during a typically busy homebuying season.
Although the Federal Reserve doesn’t set mortgage rates, it does influence them, and the lack of urgency on the Fed’s part to cut interest rates are pushing the mortgage rates higher. “As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year,” said Freddie Mac’s Chief Economist Sam Khater.
Separately, the National Association of Realtors said that home sales dropped significantly in March, an indication that potential buyers are holding back to see what happens in the market. Prices remain high, with the median cost for an existing home reaching $393,500 last month, up 4.8% from a year prior.
Despite this, there’s still not enough inventory for those who do want to move forward with a home purchase. With the current pace of sales, it would take more than three months to sell all current homes on the market, an increase of 2.9 months in February and 2.7 months in March 2023.
