The average U.S. 30-year fixed mortgage rate climbed to 7.40% this week, its highest level since November 2023, according to Freddie Mac. The rate rose from 7.28% the previous week as inflation concerns pushed Treasury yields higher. The U․S․ and Israel’s war with Iran is driving inflation and other energy prices․ The 10-year Treasury rate‚ an important driver of mortgage rates‚ is at a 24-year high․ Mortgage rates have increased 1․42 percentage points since the U․S․ and Israel’s war with Iran began in mid-February․
Higher mortgage rates and home prices are discouraging homeownership before the November 3 midterm elections․ Higher mortgage rates are discouraging homeownership‚ and current homeowners with mortgage rates below 5% are less likely to sell their homes and buy new ones with higher mortgage rates․ This has limited the supply of homes on the market, particularly starter homes, keeping prices high despite weaker demand.
Housing experts warn that the market could remain sluggish rather than suffer a sharp downturn. Lisa Sturtevant of Bright MLS said high rates are holding back both buyers and sellers, making a significant drop in home prices unlikely this fall. The combination of expensive mortgages, limited supply and persistent inflation continues to put pressure on prospective homebuyers across the country.
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