Mortgage rates rose this week, after five weeks of falling. Meanwhile, a new report says housing sales fell in March.
The 30-year fixed-rate mortgage averaged 6.39% in the week ending April 20, up from 6.27% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.11%.
“For the first time in over a month, mortgage rates moved up due to shifting market expectations,” said Sam Khater, Freddie Mac’s chief economist.
“Home prices have stabilized somewhat, but with supply tight and rates stuck above 6%, affordable housing continues to be a serious issue for many potential homebuyers,” he said. “Unless rates drop into the mid-5% range, demand will only modestly recover.”
Mortgage rates went higher than 5% for the first time since 2011 a year ago, and have remained over 5% for all but one week during the past year. Since then they have gone as high as 7.08%, last reached in November, and had been trending down since early March.
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
Home buyers remain very sensitive to weekly changes in mortgage rates.
“Last week’s jump in mortgage rates led to a pullback in mortgage applications, as homebuyers remain sensitive to rate movements,” said Bob Broeksmit, CEO of the Mortgage Bankers Association. “The lack of housing inventory this spring buying season is also keeping many prospective buyers on the sidelines.”
Housing sales fall in March
US home sales fell in March, after a turnaround in February that followed a full year of declining home sales due to surging mortgage rates, according to a National Association of Realtors report released Thursday.
Sales of existing homes in March — which include single-family homes, townhomes, condominiums and co-ops — dropped 2.4% from February. Annually, sales were down 22% from a year ago and the seasonally adjusted annualized sales pace dropped from 5.69 million units a year ago to 4.44 million in March.
March’s fall in sales upended the momentum from February’s reversal that ended the longest streak of month-to-month declining home sales on record, going back to 1999 for all homes and 1968 for single-family homes.
Mortgage rates remain volatile — so far this year average rates have ranged from 6.09% to 6.73%. Mortgage rates climbed nearly all that distance in February, when many of the homes sold in March would have gone under contract.
“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said Lawrence Yun, NAR chief economist. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand.”
The median price of a US home was lower this March than it was in March 2022, for the second month in a row following more than a decade of year-over-year increases.
The median existing home price was $375,700 in March, down 0.9% from a year ago. February marked the first monthly year-over-year price decline since February 2012. This is the biggest annual price decline since January 2012 when prices dropped 2%.
There are marked regional variations in prices, however. From last year, prices dropped most in the West (down 7.5%), where housing is more expensive. But prices were still climbing from last year in the South (up 0.3%) and the Midwest (up 1.7%) and the Northeast (up 1%).
“Home prices continue to rise in regions where jobs are being added and housing is relatively affordable,” Yun noted. “However, the more expensive areas of the country are adjusting to lower prices.”
Inventory remains stubbornly low, said Yun, but it is improving some.
Total housing inventory at the end of March was 980,000 units, up 5.4% from one year ago. Unsold inventory sits at a 2.6-month supply at the current sales pace, unchanged from February, but up from 2.0 months a year ago.
