A surge in mortgage rates to their highest level since last July has interrupted several weeks of improving homebuying demand, pushing pending sales lower and cooling purchase applications.
Source: Original report
Demand Stumbles After Weeks of Momentum
U.S. pending home sales fell 1.1% week over week during the period ending May 17, marking the first weekly decline since early April. Despite the pullback, pending sales remain at their second-highest level since September 2022 — a sign that the broader demand recovery has not fully unraveled, but the recent upswing is showing cracks.
Mortgage-purchase applications also dropped 4% from the prior week, underscoring that rising borrowing costs are translating into measurable hesitation among prospective buyers.
Rates Climb to Highest Point in Nearly a Year
The daily average mortgage rate reached 6.75% this week — the highest reading since July of last year. That marks a sharp reversal from mid-April, when the daily average dipped into the 6.3% range and helped fuel several consecutive weeks of improving contract signings.
The latest rate surge has been linked to global market unease stemming from the Iran conflict and the ongoing closure of the Strait of Hormuz, which have rattled financial markets and pushed yields higher.
Sellers Also Pulling Back
New listings declined 0.2% week over week on a seasonally adjusted basis, representing the third consecutive week of sellers reducing their activity. Rising rates appear to be discouraging not only buyers but also potential sellers who may be reluctant to give up lower locked-in rates on their existing mortgages.
Meanwhile, the median asking price climbed 1.4% year over year, indicating that even as demand softens at the margins, sellers have not broadly reduced their price expectations.
A Window for Prepared Buyers
Redfin's head of economics research, Chen Zhao, noted that while higher rates are sidelining some buyers, they may create openings for others. With conditions still favoring buyers in many markets, those with stable finances could find more room to negotiate on price and extract concessions from motivated sellers.
The data covers more than 900 U.S. metro areas and is seasonally adjusted. Weekly housing-market metrics extend back to 2021 and are subject to revision.
