Mortgage rates climbed yet again this week, with the average rate for a 30-year fixed home loan rising from 7.17% to 7.22% for the week ending May 2, according to Freddie Mac.

“The 30-year fixed-rate mortgage increased for the fifth consecutive week as we enter the heart of spring homebuying season,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “On average, more than one-third of home sales for the entire year occur between March and June. With two months left of this historically busy period, potential homebuyers will likely not see relief from rising rates anytime soon.” 

Yet amid high mortgage rates, home prices fell annually for the week ending April 27. Whether that’s enough to encourage homebuyers to forge ahead remains to be seen.

“While the drop in the median listing price offers hope for prospective homebuyers, the recent increase in mortgage rates may dampen spirits,” says Realtor.com® economist Jiayi Xu in her recent analysis. “Small but meaningful gains in affordability made since the year began have been eroded by this new uptick.”

Here’s what the latest real estate statistics mean for homebuyers and sellers in our most recent installment of “How’s the Housing Market This Week?”

Where mortgage rates may go next

On Wednesday, the Federal Reserve announced its decision to hold benchmark interest rates steady in its ongoing fight against stubborn inflation, also indicating that rate cuts aren’t in the cards soon. This means mortgage rates might not fall in the near future, either. (Though the Fed doesn’t control mortgage rates, the two numbers generally move in the same direction.)

“In order to see mortgage rates drop more significantly, the Fed will need to see more evidence that inflation is slowing,” says Realtor.com Chief Economist Danielle Hale.

Climbing mortgage rates don’t deter just homebuyers, they also give many sellers a case of cold feet.

“As mortgage rates have climbed to new 2024 highs, we could see sellers adjust their plans, since nearly three-quarters of potential sellers also plan to buy a home,” says Xu. “If mortgage rates continue to climb, sellers may reconsider their plans.”

However, Xu points out that some sellers might be sick of waiting for the perfect conditions and sally forth anyway.

“The long buildup to listing—80% have been thinking about selling for 1 to 3 years—could mean that this year’s sellers are less deterred by market fluctuations,” she says.

Why home prices are falling

Mortgage rates may be up, but home prices fell 0.5% for the week ending April 27 compared with last year. The median-priced home cost $430,000 in April.

“Smaller more affordable listings are taking the pressure off of the overall median price, which is good news for shoppers looking for these types of homes,” explains Xu.

There are also more homes to shop overall: Not only were fresh listings up by 10.4% from one year ago for the week ending April 27, but active inventory ballooned 33.3% above year-ago levels. The consistent rise in inventory week after week is closing in on a half-year mark, hitting a 25-week streak.

This is doubly true in the South, where well-priced homes—though smaller—are hitting the market.

“This could have contributed to the jump in first-time homebuying in March,” says Xu.

The pace of home sales slows down

Another surprising nugget in this week’s data is that homes lingered on the market for an extra day for the week ending April 27 compared with this time last year. (The typical home spent 47 days on the market in April.)

This rise marks the first uptick in days on the market in almost eight months of data.

“The surge in mortgage rates, which exceeded 7% in April, is prompting potential buyers to delay their purchasing decisions,” says Xu. “This reduced demand is contributing to a less competitive market, leading homes to spend more time on the market.”

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