Mortgage rates didn't budge this week. Freddie Mac reported the 30-year fixed at 7.4% on Thursday, matching last week and marking the highest reading since November 2023. A year ago, the average was 6.27%.
Rates have now gone eight consecutive weeks without dipping - the longest such streak since 2021. Over that stretch, the 30-year fixed jumped 75 basis points, outpacing the 45 basis point climb during a similar streak in 2021.
The return to 7% plus in recent weeks has rattled both sides of the market. Sellers are trimming list prices, and would-be buyers are stepping back as budgets get squeezed.
September's pending home sales fell 4% from August on a seasonally adjusted basis, according to Redfin. That was the steepest month-over-month decline in over three years, with activity at its weakest since 2014 - apart from the initial phase of the 2020 Covid pandemic.
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Before Freddie Mac published the report, Bright MLS chief economist Lisa Sturtevant said, "Expect the housing market to slow down considerably this fall,". She said existing home sales may slip below 4 million this year, which would be the first time that has happened since the 1990s.
Today's borrowing costs are still below the 18% plus mortgages of 1981, but they are now higher than the long-run average of 7.16%, and this comes as home prices are also at historically elevated levels. The pace of change is the real strain, according to Odeta Kushi, deputy chief economist at First American Financial Corp. "In this environment, people can afford less home," she said. "Income growth has been outpacing house-price growth. But unfortunately, with the higher mortgage rates, it's eating into that positive impact."
Translation for everyday budgets: higher rates, rising prices, and softer confidence are cooling activity, and that can ripple into everything from move-up plans to renovation timelines.
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