Mortgage Interest Rates Surge Above 7%, Setting New 2024 High

Stay informed on the latest surge in mortgage interest rates, impacting home prices and existing home sales. No relief in sight.

The real estate market is facing new challenges as mortgage interest rates hit a new high and existing home sales experience a slowdown. According to the latest Freddie Mac survey, the 30-year fixed-rate mortgage averaged 7.1% this week, surpassing 7% for the first time in 2024. This marks a significant increase from the previous year when rates averaged 6.39%. Similarly, the 15-year fixed-rate mortgage averaged 6.39% this week, up from 5.76% a year ago.

The elevated rates have had an impact on existing home sales, which decreased by 4.3% from February to a seasonally adjusted annual rate of 4.19 million, as reported by the National Association of Realtors. Despite the slowdown in sales, the inventory of existing homes grew by 4.7%, reaching 3.2 months of supply nationally. However, median home prices continue to climb, rising 4.8% year-over-year to $393,500, marking the ninth consecutive month of annual price gains.

The combination of high mortgage rates and home prices has resulted in record-high costs for purchasers, with the median monthly housing payment reaching $2,775, up 11% year-over-year, according to Redfin's latest market report. Despite the dip in sales, home appreciation continues to rise, raising the question of why home prices are still increasing in this challenging environment. One explanation is the presence of cash buyers who are less affected by mortgage rates, as noted by Lisa Sturtevant, chief economist for Bright MLS.

While mortgage applications saw a 3.3% increase week-over-week, they remain 10% below last year's pace, indicating a continued impact of the current market conditions on buyer activity.

The real estate market is facing a challenging period with high mortgage rates and a slowdown in existing home sales. Despite these obstacles, home prices continue to rise, driven by factors such as cash buyers and limited inventory. It remains to be seen how the market will adjust to these changing dynamics in the coming months.