Mortgage rates have inched higher again, giving some prospective buyers more reason to pause during what is traditionally the busiest period for home sales.
The average rate for a 30-year, fixed-rate home loan climbed to 6.89% Thursday from 6.86% the prior week, mortgage giant Freddie Mac said. A year ago, the average was 7.03%.
The average on a 15-year mortgage rose to 6.03%, up from 6.01% one week earlier, but down from 6.36% a year ago, according to mortgage giant Freddie Mac, which buys loans from banks, bundles them and sells them.
Rates have been slowly increasing in recent weeks, and the trend is likely to continue, according to Melissa Cohn, regional vice president of William Raveis Mortgage.
"Rates are heading higher again as ongoing tariff negotiations have yet to be formalized and ongoing concern that the proposed federal budget will also push yields higher," she told Bankrate.com. "Until there is clarity on the tariffs, we are likely to remain in a higher rate environment."
If the U.S. economy tumbles into a recession, borrowing costs would surely fall, but "that's not a happy way to bring rates down," Brad Hunter, head of Hunter Housing Economics in West Palm Beach, Florida, told Homes.com News.
Economists at mortgage giant Fannie Mae revised their economic outlook last week, and their view was sunnier.
In reports earlier this year, the team forecast that the 30-year, fixed-rate mortgage average could end 2025 as high as 6.8%. Now, that figure has been revised to 6.4%, the lowest expected average yet this year.
Economic uncertainty dampens demand
Spring is typically the most active period for residential real estate as families with children look to buy and get settled before the new school year. But elevated home values have priced some people out of the market, while economic uncertainty has deterred others.
In another sign that this will not be a typical spring buying season, contracts to sell existing single-family homes and condos fell 6.3% in April, the National Association of Realtors reported Thursday.
Some of the nation's largest homebuilders, such as D.R. Horton, Lennar and PulteGroup, are revising sales totals downward or cutting prices to drum up demand. They're also concerned that President Donald Trump's tariff plans will increase the costs of building homes. With the number of unsold homes piling up, more builders will consider selling properties in bulk to build-to-rent operators, Hunter predicted.
Daily mortgage rates for a 30-year loan are also up, rising 0.01% to 6.98% as of Thursday afternoon, according to Mortgage News Daily. The daily rate is often more volatile than the weekly data.
Meanwhile, mortgage applications decreased 1.2 percent from one week earlier, according to the Mortgage Bankers Association. Refinancings fell 7% from the previous week but were 37% higher year over year, the trade group said.
As rates remain elevated, experts remind consumers they don't have to depend on just one or two lenders.
“Aspiring buyers should remember to shop around for the best mortgage rate, as they can potentially save thousands of dollars by getting multiple quotes,” Sam Khater, Freddie Mac’s chief economist, said in a statement.