The U.S. housing market is coming under renewed pressure, buffeted by mortgage rates that rose above 7% again and uncertainty over changes to the commission system for buying and selling a home.
The average rate on the standard 30-year fixed mortgage jumped by nearly a quarter percentage point to 7.1%, according to a survey of lenders released Thursday by mortgage-finance giant Freddie Mac. That is the highest level since late 2023 and the largest weekly increase in nearly a year.
Existing home sales in March, meanwhile, posted their biggest monthly drop in more than a year, the National Association of Realtors said Thursday. The 4.3% decrease from February was the largest percentage decline on a monthly basis since November 2022, NAR said.
The housing market’s recent turbulence is cutting short a positive start to the year. Sales tumbled to their lowest level in nearly 30 years in 2023. But they rose during the first two months of this year as a number of buyers took advantage of a decline in mortgage rates to resume their home search. Active listings ticked higher and real-estate showings picked up in January.
Mortgage rates started to rise again in February, weighing on March sales. The recent spike in borrowing costs could drag affordability back to the historic lows it reached last year. Home prices are near record highs. Other costs to own a home, such as insurance premiums, property taxes and maintenance, have skyrocketed, too.
Home buyers are also confused about coming changes to the rules governing how real-estate agents get paid, and whether those changes could increase or decrease their overall costs. NAR reached a historic settlement of claims last month that the industry conspired to keep agent commissions high. The new rules are expected to make it easier for home buyers to negotiate fees with their own agents.
That could prompt some home shoppers and sellers to pause until there is more clarity when the new rules go into effect in July.
The combination of higher rates and uncertainty about the new commission structure now threaten to halt momentum during the crucial spring home-buying season, which is typically the housing market’s busiest time of year.