Mortgage rates did not simply rise this week—they soared past 7% for the first time since December 2023, putting a massive hurdle in front of homebuyers hoping to find an affordable home this spring.

The average rate for a 30-year fixed home loan rose from 6.88% to 7.10% for the week ending April 18, according to Freddie Mac.

“The 30-year fixed-rate mortgage surpassed 7 percent for the first time this year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “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.”

Yet homebuyers feeling the sting of high mortgage rates might still be enticed to shop the growing number of homes for sale, at prices that are holding steady.

“Fortunately, buyers will find more options than last year, and prices are staying about the same,” says Realtor.com® economic data manager Sabrina Speianu in her most recent analysis. “However, affordability issues will stick around until mortgage rates drop more significantly.”

Here are the other vital metrics that will give homebuyers and sellers insight into the state of the real estate market in this latest installment of “How’s the Housing Market This Week?”

High mortgage rates may stick around

What’s been triggering the spike in mortgage rates all comes down to the same answer week after week: inflation.

“Lingering high inflation rates have deferred hopes for a Federal Reserve policy rate cut, consequently postponing expectations of meaningful declines in mortgage rates this year,” says Speianu.

In the big picture, the Federal Reserve’s decision not to cut rates has become a “familiar pattern,” as Speianu puts it.

“March’s inflation data increased the likelihood [that] we will continue to live in a prolonged period of high rates and face expensive borrowing costs, including high mortgage rates,” adds Realtor.com economist Jiayi Xu.

Home prices remain steady

In a bit of welcome news, home prices remained flat for the week ending April 13 compared with last year. (Listing prices hit a median of $424,900 nationwide in March.)

“Last week, the prices for homes on the market stayed steady, marking the 12th consecutive week without much change compared with last year,” says Speianu. “This consistency is partly due to fewer buyers competing for homes, as interest rates have yet to significantly drop, but there has also been a shift in the types of homes available.”

Homes hitting the market as of late tend to be smaller and more affordable, with properties priced between $200,000 and $350,000 increasing by 30.5% in March compared with last year. Home shoppers looking to score a deal should head to warmer climes as Southern listings make up a whopping 57.4% of for-sale homes in that price range in March.

Another economic factor that might take the edge off high mortgage rates is the number of sellers offering price reductions, which reached 15% in March, a number not seen since March 2017.

The impact of high mortgage rates on sellers

Buyers can look for a flush of new listings, since they’re up 7.2% for the week ending April 13 compared with last year. But the growth of new listings is slowing week to week, now down to a percentage not seen since February.

“Ongoing elevated inflation seems to be motivating more sellers, many of whom are potential buyers themselves, to wait for more stable or declining mortgage rates before making a move,” says Speianu.

Despite that, overall active inventory increased by 29.1% for the week ending April 13 above last year’s levels for the 23rd week in a row.

“There were more homes listed for sale compared with the previous year, giving homebuyers a wider selection to choose from,” says Speianu.

The current jump in mortgage rates will likely affect future inventory, persuading some buyers (and sellers) to drop out of the market. But this could be a good thing for those who stick around.

“Some buyers might wait for rates to decrease further, temporarily reducing competition and potentially lowering prices,” adds Speianu.

The spring market marches on

Yet affordability headwinds are not deterring determined buyers from closing the deal.

In March, homes spent a median of 50 days on the market. And while homes spent the same amount of time on the market for the week ending April 13 compared with the same period last year, it’s worth noting that this is still 12 days faster than the typical homebuying pace seen from 2017 to 2019.

“Although there’s been a noticeable increase in inventory compared with last year, homes are still selling quite fast,” says Speianu. “Well-priced homes, especially starter homes, are still attracting a pool of eager buyers.”

The post Homebuyers Get Hit With Brutal News: Mortgage Rates Soar Past 7% appeared first on Real Estate News & Insights | realtor.com®.