US mortgage rates back near 7% again

My father used to tell me how beer was a nickel in his day. I was never sure if he was bragging or lamenting inflation, but everyone has a similar story from their parents or grandparents about when prices were lower. Those days are long gone, and we may be saying the same for the days of 3% mortgage rates. This week, the 30-year average mortgage rate reached its highest point (nearly 7%) since January, presenting a new reality for homebuyers and the economy.

Despite these elevated rates, new single-family home sales surged by 10.9% in April. This suggests that buyers are adapting to higher borrowing costs, possibly aided by strategic incentives from builders.

However, the broader economic landscape is marked by uncertainty. High mortgage rates, policy uncertainty and rising construction costs are reshaping housing market dynamics. Builders face the challenge of balancing inventory levels with demand, while consumers navigate affordability concerns.

As we move forward, the housing market's resilience will be tested by these economic headwinds. Both builders and buyers must adapt to this evolving environment, finding ways to thrive despite the pressures of rising costs and higher interest rates. The days of extremely low mortgage rates may be behind us, but the drive to achieve homeownership remains strong.

All market and economic data as of 05/28/25 are sourced from Bloomberg Finance L.P. and FactSet unless otherwise stated.

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