Key facts
- Average 30-year fixed-rate mortgage is 7.4%.
- US had a shortage of 3.7 million homes in late 2024.
- Home prices are considered sky-high.
- Monthly payment for a home in Sacramento would exceed $2,400 rent.
Mortgage rates have surged back above 7 percent, dashing hopes for a recovery in the housing market. The average interest rate on a 30-year fixed-rate mortgage stood at 7.4 percent as of Thursday, a significant increase from below 6 percent in late February. This rise is linked to soaring yields on 10-year Treasury notes, fueled by concerns over persistent inflation, ballooning national debt, and optimism surrounding AI-driven growth. Experts suggest rates are unlikely to decline significantly without a recession. The combination of high mortgage rates and elevated home prices is making homeownership increasingly unaffordable, particularly for first-time buyers. Homeowners with low pandemic-era mortgage rates are less likely to sell, further limiting housing inventory. This situation could lead more people to remain renters, potentially driving up rental costs as new apartment construction slows.