Mortgage Rates Rise Again: What Does This Mean for the Housing Market?

As the spring home buying season begins, mortgage rates have seen a slight uptick. Despite the Federal Reserve's decision to keep interest rates unchanged, mortgage rates remain high, causing pressure for both home buyers and sellers.

Mortgage Rates Increase to 6.67%

According to Freddie Mac data, as of March 20, the 30-year fixed mortgage rate has risen to 6.67%, up slightly from 6.65% the previous week. Although this is lower than the 6.87% rate from the same time last year, it remains high.

Freddie Mac's Chief Economist, Sam Khater, noted that the mortgage rate staying below 7% for nine consecutive weeks is a positive sign for both buyers and sellers. However, economic experts predict that mortgage rates will likely remain in the 6% range for the time being, as the Fed's decision to hold rates steady suggests minimal movement in the near future.

Increasing Inventory and Price Adjustments: Changes in the Housing Market

The housing market is seeing a steady increase in inventory, while price growth appears to be slowing down.

Home Prices Stall
- The median list price for homes is holding steady compared to last year, with home price growth reaching 0% on a yearly basis for the first time since October 2024.
More Price Reductions
- Sellers are adjusting prices to accelerate sales. The proportion of homes with price reductions has increased by 0.8% compared to last year.
Rising New Listings
- New listings have increased for 10 consecutive weeks into 2025, showing a 10% rise in new homes for sale compared to last year. This surge is driven by sellers deciding it's the right time to sell rather than waiting for a potential drop in mortgage rates.

Market Slowdown: More Listings, Slower Transactions

While the inventory is growing, transactions are taking longer to complete.

Total Inventory Up
- The total number of homes for sale has increased by 28.5% compared to last year, marking a 71-week streak of rising inventory.
Slower Transactions
- Homes are staying on the market an average of 4 days longer than this time last year. Buyers are taking more time to make decisions, given the increased number of options available.

Outlook: When Will Mortgage Rates Decrease?

Real estate experts suggest the Federal Reserve may ease interest rates later this year, potentially leading to a drop in mortgage rates. However, a significant and immediate decrease is unlikely.

Joel Berner, Chief Economist at Realtor.com, mentions that the Fed may lower rates in the second half of the year, which could lead to a decline in mortgage rates. However, a sharp drop in rates in the short term is not anticipated.

Conclusion: Is Now the Right Time to Buy or Sell?

The housing market is at a turning point.

For Buyers:
- With more options available, buyers have a better chance of finding a home with favorable terms. Some sellers are lowering prices, which could offer more room for negotiation.
For Sellers:
- With price growth slowing, it might be a good time to sell before prices drop further. Experts suggest that April 13-19 could be the best time to sell a home this year, so sellers should consider this timing when strategizing.

While the market may continue to change in the coming months, it’s important for both buyers and sellers to be strategic and consult with real estate experts to decide on the best time to make a move.