Mortgage rates in the United States have surged past the 7% mark, exacerbating the housing affordability crisis that the country is currently facing. The 30-year fixed-rate mortgage reached an average of 7.10% in the week ending April 18, up from 6.88% the previous week, marking a significant increase from the 6.39% rate recorded a year prior. This rise in mortgage rates comes amid expectations that the Federal Reserve will not be cutting interest rates in the near future, with persistent inflationary pressures keeping the Fed on hold.
As mortgage rates continue to climb, potential homebuyers are left to weigh their options – whether to purchase a home now before rates climb further, or to hold off in the hopes of a decrease later in the year. The housing market is feeling the impact of these rising rates, with US home sales declining sharply in March as buyers adopt a cautious approach amidst the challenging market conditions. Additionally, high mortgage rates are compounded by elevated home prices nationwide, with the median price of an existing home reaching $393,500 in the latest report, up 4.8% from the previous year, showcasing the strain on affordability in the housing market.
Despite these challenges, there is a glimmer of hope with an increase in housing inventory in recent months. However, the overall supply is still unable to meet the demand, further exacerbating affordability issues. The lingering uncertainty over proposed changes in how real estate agents are compensated, along with the impact of rising mortgage rates, has created a sense of unease in the housing market. Prospective homebuyers are cautiously optimistic, looking towards potential settlement changes for relief amidst the current hurdles they face in navigating the challenging real estate landscape.
