Despite forecasts that mortgage rates will slowly ease, buying a home is still too costly for most people. The average 30-year fixed rate has been in the 7% range over the last 7 months, creating some hefty monthly payments.
In the US as of today, the average rate on a 30-year fixed mortgage is 6.81%, .06% lower than last week. The average rate on a 15-year fixed mortgage is 6.02%, down .03% from a week ago, as cited by Cnet report.
A Reuters report states that home sales in the US jumped in May, but the housing market hit a snag as high mortgage rates continue to wreak havoc.
The National Association of Realtors reported that sales inched up 0.8% to a yearly pace of 4.03 million homes. Even with the slight boost, it was the slowest May for home sales in 15 years.
Also Read: Understanding Home Loan Interest Rate: A Simple Guide to Financing Your Home
Builders are cutting prices to attract buyers
Sales fell 0.7% from a year ago. A survey from the National Association of Home Builders showed builder confidence dropped to a 2½-year low in June. More builders are cutting prices to attract buyers, and the group expects single-family home starts to decline this year.
Residential investment, which covers home sales and construction, shrank slightly in the first quarter after growing in 2024. This followed sharp declines in the two prior years caused by rising mortgage rates.
Existing home supply rose 6.2% in May to 1.54 million units. That is 20.3% higher than a year ago.
The median price of existing homes rose 1.3% from last year to $422,800. That marked a record high for May.
At May’s sales pace, it would take 4.6 months to sell all current inventory, up from 3.8 months a year ago.
‘If rates fall later this year, home sales should rise…’
Lawrence Yun, chief economist at the Realtors group, said, “Sales are low mainly because mortgage rates remain high. If rates fall later this year, home sales should rise.”
The average rate on a 30-year fixed mortgage has stayed just under 7% this year. President Donald Trump’s tariffs on imports have added economic uncertainty. The Federal Reserve has paused cutting interest rates because of this.
Last week, the Fed held its main rate at 4.25% to 4.5%, where it has been since December. Fed Chair Jerome Powell said tariffs could cause “meaningful” inflation.
Homes stayed on the market for 27 days in May, compared to 24 days a year ago.
First-time buyers made up 30% of sales, down from 31% last year. Experts say 40% is needed for a strong market.
All-cash sales were 27% of transactions, down from 28% last year. Distressed sales, like foreclosures, rose to 3% from 2% last year.
