Homebuyers and sellers appear to be hesitating, with mortgage application activity stalling as weekly average rates hit 6.46% following five weeks of increases.
Key points:
- The 30-year fixed-rate mortgage averaged 6.46% this week, inching closer to the elevated levels seen last spring.
- A monthly mortgage payment is now approximately $115 higher than it was just four weeks ago, leading to a decline in financing applications.
- Economists say a spring housing market recovery is still possible if rates start dropping — but time is running out.
The start of the spring homebuying season appears to have stalled as both buyers and sellers wait for positive signals.
As mortgage rates continued rising, pending sales and mortgage applications slowed this week in a sign that this season’s buyers haven’t yet arrived. New listings also dropped off, indicating that sellers are similarly on pause.
The latest batch of weekly housing market data suggests that while these shifts are not huge, demand does seem to be cooling. “This market is trying to grow, but there are a lot of affordability hurdles in the way,” Compass Chief Economist Mike Simonsen said in his weekly YouTube update.
One of the hurdles that’s becoming increasingly harder to clear: mortgage rates. The 30-year fixed-rate mortgage averaged 6.46% this week, according to Freddie Mac. This marks the fifth consecutive week of increases and the highest weekly average 30-year rate recorded in seven months as rates close in on the elevated levels that stalled the market last spring.
Buyers, sellers ‘would be wise to stay nimble’
The recent mortgage rate uptick roughly translates to a $115 higher monthly payment than when 30-year rates were hovering around 6% just four weeks ago, according to Hannah Jones, a senior economic research analyst at Realtor.com.
“Looking ahead, further rate volatility will likely continue to hinder the housing market,” Jones wrote in an April 2 report. “For now, buyers and sellers alike would be wise to stay nimble. Those who can act quickly when rates dip may find meaningful windows of opportunity in the months ahead.”
Before the war in Iran began, mortgage rates had steadily dropped for months, even dipping briefly below the 6% threshold in February. So is the rise seen over the past few weeks enough to ruin a spring that many real estate professionals had hoped would deliver a market rebound.
If the current rate shock resolves quickly, it’s still early enough for catch-up activity, wrote Kara Ng, senior economist at Zillow. But the longer these conditions last, “the more likely transactions would be delayed to next season, offering a repeat of 2025,” Ng said.
Mortgage application activity drops more than 10%
The rise in mortgage rates has unsurprisingly led to a slowdown in financing applications. Overall activity was down 10.4% for the week ending March 27 compared to one week earlier, according to the Mortgage Bankers Association (MBA). Refinance applications are slowing more than purchase applications, with the seasonally adjusted purchase index down 3% week-over-week.
“The shocks of the jump in rates and the increase in overall economic uncertainty are likely having an impact on buyer confidence,” said Mike Fratantoni, MBA’s SVP and chief economist.
Economic volatility could keep sellers on the sidelines
Simonsen estimates that new listings are down 2% this week compared to a year ago, while overall inventory has stopped shrinking — a sign that demand is weakening and may start to climb again.
Redfin, which uses a four-week rolling average, estimated that new listings are up 1.7% year-over-year while active listings dropped 1.7% for the four weeks ending March 29.
On the whole, the mortgage market is navigating a complicated intersection of geopolitics and domestic economic policy, noted Lisa Sturtevant, chief economist at Bright MLS.
“The spring housing market is in a holding pattern,” Sturtevant said. “The volatility in rates will keep more prospective home sellers in their homes. And buyers are having to do new math to see how much they can afford with rates now close to 6.5%”