The housing market, already in a slump, saw existing home sales in 2024 likely hit their lowest level since 1995
Mortgage rates surpassed 7% this week for the first time since May, according to Freddie Mac, marking a significant hurdle for the already dragged housing market.
The average rate on 30-year-fixed-rare mortgages climbed to 7.04%, more than twice as high as they were for stretches of 2020 and 2021 when they were around 3%.
High home prices, rising ownership costs, like insurance and taxes, and increased rates have made home buying unaffordable for many Americans.
The housing market, already in a slump, saw existing home sales in 2024 likely hit their lowest since 1995.
Spring selling season at risk
Experts warn the rate increase could hinder the critical spring selling season, traditionally the busiest time for home sales.
The market has been struggling for some time. Last year, existing home sales likely hit their lowest levels since 1995.
Since September, the benchmark interest rates have gone down a full percentage point, which had raised hopes among homebuyers that the costs of financing a house might come down.
Occasional rate dips, such as the temporary decline in mortgage rates to just above 6% last summer, also provided hope but failed to sustain momentum.
Buyers and sellers feel stuck
Many potential buyers await lower rates, while homeowners with older, low-interest mortgages feel locked in place. Limited supply and rising costs add to market uncertainty, further dampening activity.