Home Buying Eases as Mortgage Rates Nearly Double the Pandemic Low
Pending home sales reveal impact of mortgage rate surge. Upward pressure on mortgage rates from lofty inflation and the Fed’s plan to hike interest rates multiple times this year are influencing home buying. In late April, the average rate for a 30-year mortgage climbed for the seventh consecutive week to 5.1 percent, up 200 basis points from the beginning of this year and almost twice as high as the 2020 trough. While demand for homes remains sturdy, the higher cost of borrowing is condensing buying activity. The pending home sales index illustrates this trend, with the March measure the lowest since early 2020 and 8 percent beneath the recording one year prior. A slowdown in purchases, however, has not yet weighed on price growth. The median sale price of an existing home rose 1.3 percent month-over-month in March.