Mortgage rates in the U.S. just climbed to their highest level of the year, putting new pressure on prospective homebuyers and reshaping the housing market as summer gets underway.
According to Freddie Mac’s latest survey, the average rate on a 30-year fixed mortgage is now 7.12 percent—the highest it’s been since November 2023. This marks the fifth straight week of increases.
Affordability under strain
For buyers, the impact is immediate and significant. A household purchasing a $400,000 home with a 20 percent down payment now faces a monthly mortgage cost of about $2,700—nearly $800 more than in mid-2021, when rates were under 3 percent.
“With rates above 7 percent, we’re seeing more buyers hit pause,” said mortgage analyst Erin Clark. “Even those with strong credit are reconsidering their budgets or waiting for better conditions.”
Inventory still tight despite high rates
Normally, higher rates would cool demand and boost supply. But that hasn’t happened in most markets. Many current homeowners are holding onto sub-4 percent mortgages and are reluctant to sell, keeping inventory levels below historic norms.
As of early June, active listings are up just 3 percent year-over-year, according to Redfin. That’s not enough to balance the market or ease prices in most metro areas.
Some markets are feeling the pressure
Price growth is slowing in rate-sensitive markets like Phoenix, Las Vegas, and parts of the Midwest. These areas have seen fewer bidding wars and more price reductions in recent weeks.
In contrast, cities like Miami, Charlotte, and Dallas remain competitive, largely due to population growth and tight housing supply.
What buyers can do now
Experts suggest buyers explore all options—including rate buydowns, adjustable-rate mortgages, and new construction incentives. Some builders are offering to cover closing costs or buy down rates to attract qualified buyers.
Others are turning to co-buying, larger down payments, or simply staying in place longer to save for a better opportunity.
Outlook for summer 2025
Economists don’t expect major relief in mortgage rates until late 2025, unless inflation cools more quickly than forecast. For now, the combination of high borrowing costs and limited supply is likely to keep housing affordability strained through the summer.
If you’re planning to buy, watch for local shifts in inventory and price cuts. Conditions are beginning to vary widely between regions—and even neighborhoods.
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