Mortgage rates are inching back toward 7%, highlighting the ongoing strain on US home buyers.
The average rate on a standard, 30-year fixed mortgage was 6.86% in the week ending May 22, the highest level since mid-February, according to data released Thursday from Freddie Mac.
Growing concern about the national debt impacted home borrowing rates this week.
Mortgage rates track the benchmark 10-year Treasury yield, which climbed higher as bonds sold off after US federal debt was downgraded from a perfect rating by Moody’s Ratings on Friday. Yields continued rising into the week as Wall Street investors began to fret about how much a potential tax bill pushed by the Trump administration could add to the country’s debt load.
Elevated borrowing rates, coupled with still-climbing home prices, have already stalled spring’s traditionally busy home buying season: Sales of previously owned homes dropped by 0.5% last month on a seasonally adjusted basis, according to data released Thursday by the National Association of Realtors. That’s the slowest rate of growth since April 2009, NAR said.
Despite a slowdown in sales, national home prices aren’t falling. The median existing-home sales price rose 1.8% from April 2024 to $414,000, NAR said. That is an all-time high for the month of April and the 22nd consecutive month of year-over-year price increases, the group said.
The spring home buying season was further disrupted last month by economic uncertainty fueled by President Donald Trump’s on-again, off-again tariff policies. About one in every seven home-purchase agreements fell through last month, according to data released by Redfin on Thursday.
Still, this time last year, the typical 30-year mortgage was higher, at 6.94%. That should improve affordability for home shoppers, said Kara Ng, a senior economist at Zillow.
There are also more options on the market for prospective home buyers: There were 1.2 million homes for sale in April, nearly 20% more than a year ago, according to Zillow data.
“If household uncertainty around jobs, investment portfolios and budgets eases, then home sales could be poised for a rebound in the months ahead,” Ng said in a statement. “However, the affordability advantage could diminish if mortgage rates continue to rise.”
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