Weekly Mortgage Rates Rise, Falling Sales Show Home Buyer Squeeze

This article was first published on NerdWallet.com.

Mortgage rates increased this week for the first time in June, ending the month on a low note.

The 30-year fixed-rate mortgage averaged 6.81% APR, up five basis points from the previous week's average, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.

Pending home sales drop as home prices boom

The latest pending home sales report from the National Association of Realtors (NAR) shows that contract signings were down an average of 2.1% in May, with month-over-month declines in the Midwest and South regions but increases in the Northeast and West. Year-over-year, pending home sales were down in all four regions.

“The market is at an interesting point with rising inventory and lower demand,” said NAR Chief Economist Lawrence Yun, who suggested that sales will “inevitably” rise when mortgage rates come down.

Yun went on to note that fewer than expected homes sold in the first half of 2024, while prices exceeded initial forecasts. The NAR predicts that median existing home prices will reach a record high of $405,300 this year, up from $389,800 in 2023. While Yun’s tone is optimistic that lower mortgage rates are coming, buyers are feeling squeezed today.

What does 'affordable' mean, anyway?

Zillow underscored the strain that home buyers are under with the release of a new report on June 20, which analyzed the real estate markets in 50 major U.S. metropolitan areas. The report found that for median-income households, buyers need to put down a whopping $127,750 dollars — or 35.4% — in order to “comfortably afford” a mortgage on a typical home. This report defines...