Mortgage rates are higher now than they’ve been so far this year.

The average rate for a 30-year fixed home loan edged upward from 6.77% last week to 6.9% for the week ending Feb. 22, according to Freddie Mac.

The reason rates have ridden upward of late has to do with the strong economy.

“Strong incoming economic and inflation data has caused the market to reevaluate the path of monetary policy, leading to higher mortgage rates,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Historically, the combination of a vibrant economy and modestly higher rates did not meaningfully impact the housing market. The current cycle is different than historical norms, as housing affordability is so low that good economic news equates to bad news for homebuyers, who are sensitive to even minor shifts in affordability.”

Will mortgage rates continue to rise and keep buyers on the sidelines as the traditionally busy spring housing market kicks off in less than a month? Here’s what the latest housing statistics could mean for homebuyers and sellers in this latest installment of “How’s the Housing Market This Week?”

The mortgage rates question

Despite this latest bad news for homebuyers, the good news can be seen within the bigger picture: Mortgage rates are at least down from when they reached an even higher peak in 2023, when a 30-year fixed averaged 7.79% for the week ending Oct. 26.

Rates have continued to pingpong in the mid-to-high 6% range without a big dip forecast on the horizon anytime soon. Yet that doesn’t mean a further drop in rates won’t ever happen.

“While the decline in mortgage rates has stalled in recent weeks due to strong economic and labor market conditions and an uneven decline in inflation, optimism that they will resume their decline remains high,” says Realtor.com® economic data manager Sabrina Speianu in her most recent analysis.

Inventory continues to rise

Meanwhile, other housing market data was quietly improving for the week ending Feb. 17.

Not too long ago, active inventory growth almost ground to a halt, with very few new listings for buyers to shop. Now that same metric is up—way up.

For the week ending Feb. 17, 10.9% more home sellers entered the market than this same week a year earlier, marking a 17-week upward streak. Active inventory (a combination of new and old listings) rose by a whopping 15.7% for the same period.

“Home listings continue to become more plentiful so far this year, as sellers list at rates higher than last year,” says Speianu. The continued run of new homes for sale “could further contribute to a recovery in active listings, meaning more options for home shoppers.”

Home price growth slows

Much like mortgage rates, median home prices are in relative limbo, not going up by much but not falling dramatically either.

For the week ending Feb. 17, the median home list price was 0.2% higher compared with the same week the prior year. (The median list price in January was $409,500.)

While the numbers on the listing page may seem to be in stasis, the listing price growth “declined from the previous week [+0.3%], as listing price growth continues to cool,” Speianu explains.

She adds that price growth has “slowed considerably as sellers adjust to market expectations and listing price reductions have increased.”

In other homebuyer-friendly news, the sluggish home price growth trajectory seen this season could mean that home prices might not reach the $441,000 high seen in June.

“Slower listing price growth and more inventory will provide more options for buyers this spring compared to a year ago, as the housing market is expected to continue a slow recovery,” says Speianu.

Countdown to spring

Despite high home prices and mortgage rates, home shoppers seem more determined than ever to close the deal.

For the week ending Feb. 17, houses were snapped up four days faster compared with the same time last year, marking a four-month run that the typical home lingered on the market for less time than the same week one year ago.

Homebuyers gearing up to buy a home in spring should pay close attention to this metric and not waste time making an offer.

“While inventory has increased compared to last year, there are no indications of an oversupply as inventory continues to remain low compared to pre-pandemic years and the time a typical listing spends on the market is relatively low,” says Speianu.

The post Mortgage Rates Just Hit a New High for 2024—Here’s Why appeared first on Real Estate News & Insights | realtor.com®.