Scroll Down
Home Prices and Borrowing Costs Climb,
Further Constricting the Market
Higher mortgage rates influence buyer and seller motivation. The average 30-year fixed-rate mortgage climbed to a five-month high of 7.0 percent in April 2024, as the market responded to persistent inflationary pressures and Federal Reserve policy. Increasing borrowing costs, meanwhile, encouraged more prospective buyers to sit tight on the sidelines, reflected in existing home sales sliding to a three-month low in April. This reduction in purchase activity, however, coincided with a decline in home listings — which fell 1.4 percent month-over-month — implying that higher borrowing rates are also impacting sellers' willingness to trade out lower rate mortgages in the current climate. That combination of softer buyer demand and easing sell-side motivations, in turn, pushed the median home price to the second-highest figure on record at $405,400 in April. A concoction of near all-time high home prices and elevated mortgage rates may keep the housing market exceptionally tight in the coming months.