In a challenging housing market, would-be homebuyers are grappling with elevated rates this spring. The average rate on a 30-year fixed loan hit 7.1%, marking the first time the weekly average has exceeded 7% this year. A separate index by Mortgage News Daily shows even bigger swings, with the daily average rate climbing to 7.43% on Thursday.
Demand for Mortgage Applications Rises
Despite higher mortgage rates, demand for mortgage applications increased for the second week in a row. The volume of purchase applications rose by 5% during the week ending April 12, although purchase activity remains 10% below last year’s pace. Refinance applications saw a slight increase of 0.5%, following a surge in demand from government loan applicants seeking lower rates.
Existing Home Sales Slump
Sales of previously owned homes retreated more than 4% in March to a seasonally adjusted annual rate of 4.19 million, down nearly 4% compared to a year ago. The median price for existing home sales rose 5% from March 2023 to $393,500, marking the highest price for the month of March and the ninth consecutive month of year-over-year increases.
Regional Breakdown
- Midwest: Sales retreated nearly 6%, with the average price at $292,400, up over 7% from last year.
- South: Sales fell nearly 6%, with the median price at $359,100, up over 3% from a year earlier.
- West: Existing home sales plunged over 8%, with the median price at $603,000, up almost 7% from a year ago.
- Northeast: Home sales increased 4%, ending a four-month streak, but were down nearly 4% compared to last March, with the median price at $434,600, up 10% from the previous year.
Buyers Face Headwinds
Elevated rates, still-high home prices, and tight inventory continue to burden would-be buyers this season. Potential buyers are ready to pounce when rates drop, but frustration is building as Federal Reserve rate cuts, which influence mortgage rates, are delayed due to inflation remaining above 3%. The spring housing market has yet to take off as buyers navigate these challenging conditions.