• Pending home sales dropped 3.7% week-over-week and 1.9% year-over-year to 311,150, the lowest in over five months.
  • The average 30-year mortgage rate rose to 6.69%, curbing buyer demand and pushing purchase applications down 4% weekly.
  • Despite weaker demand, the median home sale price increased 2.9% year-over-year to $406,362, underscoring persistent affordability challenges.

Pending Sales Slip as Rates Climb

The U.S. housing market continues to feel the squeeze from higher borrowing costs, with pending home sales falling to a five-month low in the latest week. According to data released Wednesday, pending contracts declined 3.7% from the previous week and 1.9% year-over-year, landing at 311,150 — the weakest reading since early March. The pullback reflects renewed pressure from mortgage rates, which have climbed back toward recent peaks.

The average 30-year mortgage rate rose to 6.69%, up from 6.55% a week earlier, according to Freddie Mac. That uptick has been enough to push more potential buyers to the sidelines. Mortgage purchase applications fell 4% week-over-week, signaling that affordability remains a major hurdle for many households. "Rates are the dominant factor right now," said Daryl Fairweather, chief economist at Redfin. "Every tick higher takes more buyers out of the market."

The data, compiled by Altos Research, measures signed contracts on existing homes, making it a leading indicator of closed sales in the coming months. The latest figures suggest that the spring buying season, which typically heats up in May and June, is losing momentum. Real estate agents in several regions report that showings have slowed and bidding wars have become less frequent, particularly in higher-priced coastal markets.

Prices Keep Rising Despite Cooler Demand

Perhaps more striking is the fact that home prices continue to climb even as demand softens. The median sale price for homes under contract was $406,362, up 2.9% from a year ago. This resilience reflects a persistent inventory shortage, with many homeowners locked into low-rate mortgages and reluctant to sell, limiting supply. "The market is caught in a paradox: fewer buyers, but also fewer listings, so prices hold up," noted Lawrence Yun, chief economist at the National Association of Realtors. "It’s not until we see significant inventory gains that we’ll see price relief."

The combination of rising rates and firm prices is weighing on affordability by nearly every measure. The monthly payment on a median-priced home with a 20% down payment is now roughly $2,600, up about 7% from a year ago, according to calculations from the Mortgage Bankers Association. That’s outpacing income growth, forcing many first-time buyers to delay purchases or look to cheaper regions.

Outlook: More of the Same?

Should rates stay at current levels, the housing market could see additional softening in pending sales over the next few months. However, any indication that the Federal Reserve might cut rates later this year could provide a modest boost. "We’re at a critical juncture," said Odeta Kushi, deputy chief economist at First American Financial. "If rates ease, we could see a quick rebound in activity; if they don’t, the summer months could be quite tepid."

For now, buyers and sellers alike are watching the bond market closely, as mortgage rates tend to track the 10-year Treasury yield. The upcoming economic data, including inflation reports and employment figures, will likely shape the Fed’s next moves — and by extension, the trajectory of home sales.

Correction: An earlier version of this article misstated the director of the National Association of Realtors. The correct official is Lawrence Yun, the chief economist.