Mortgage rates are climbing, putting the spring housing market in a holding pattern. The war in Iran, inflationary pressures, and a slowing job market are the key factors driving costs higher for home loans.
Despite a 0.6% rise in April CPI and inflation at 3.8%, mortgage spreads have kept rates under 7%. At 1.96%, this spread is preventing rates from reaching 7%, with the current average hovering near 6.52%.
Regional impacts are uneven, with some markets experiencing more significant slowdowns. Buyer purchasing power is eroding as rates rise, making affordability a growing concern in many metros.
Inventory levels remain tight, and days on market are extending as sellers hesitate to list. Negotiation dynamics are shifting, with buyers gaining some leverage in certain areas.
Economists forecast that rates could remain elevated until inflation eases or geopolitical tensions subside, potentially delaying any spring recovery.