Mortgage rates rose above 7%, reaching their highest level since November

Washington
CNN
—

Mortgage rates soared this week, surpassing the key 7% threshold, exacerbating America's housing affordability crisis.

The average 30-year fixed-rate mortgage was 7.10% in the week ending April 18, up from 6.88% the week before, according to Freddie Mac data released Thursday. A year ago, the average 30-year fixed rate was 6.39%.

Exceeding 7% represents a psychological threshold that has not yet been crossed this year.

Mortgage rates are rising on expectations that the Federal Reserve will not cut interest rates anytime soon. The Fed does not directly set mortgage interest rates, but its actions influence them Constantly hot inflation readings Keeps the Fed in a holding pattern.

“As interest rates rise, potential homebuyers are deciding whether they will buy before interest rates rise further or hold off in hopes of them falling later in the year,” Sam Khater, chief economist at Freddie Mac, said in a statement.

In a separate report, the National Association of Realtors said this US home sales fell sharply in March A sign that homebuyers are waiting on the sidelines as they deal with a difficult housing market.

Fed officials have already indicated they expect this Fewer interest rate cuts this year than they previously thought, based on recent economic data showing that progress on inflation has essentially stalled. Some economists have raised the possibility that the Fed may not cut interest rates this year at all — and two central bank officials have mentioned the possibility of raising rates again.

This has caused bond yields to rise. Mortgage rates track the yield on the benchmark 10-year Treasury note, which rose to its highest level since November at 4.637%. The release of the Consumer Price Index for March Hotter than expectedThis affected the stock market and also prompted forecasters to decline their estimates of the first interest rate cut.

If inflation stalls further, or even worsens, mortgage rates could rise this year.

“Home buying is such a major decision that people put a calculator in front of them, so if it was 7.01%, that would be an emotional shock, but nonetheless I think they would plant a number in the calculator and see if it works,” said Lawrence Yun, chief economist at NAR. In a call with reporters on Thursday, the monthly payment can be controlled or not.

Housing affordability is being undermined not only by rising mortgage rates, but also by rising housing prices across the country.

The median price of an existing home reached $393,500 last month, an increase of 4.8% from a year earlier, NAR reported Thursday. This was the highest price on record for March. February prices also reached a record high. Today's housing market is tough by many measures, but Americans also enjoy one of the strongest job markets in history.

This story has been updated with additional developments and context.