Key facts
- Higher-income buyers are increasingly likely to want to buy a home.
- Lower-income consumers are struggling to afford homes due to rising prices and limited inventory.
- The average 30-year fixed mortgage rate was 7.4% this week, up from 6.27% a year ago.
Rising mortgage rates are creating a divide in the US housing market, making it harder for typical buyers to afford homes. The average 30-year fixed mortgage rate reached 7.4% this week, a significant increase from 6.27% a year ago. This surge in rates, coupled with limited inventory and rising prices, is deepening affordability challenges.
Higher-income consumers, who have more cash on hand and larger budgets, are increasingly driving housing transactions. This trend reflects a broader "K-shaped" economy where wealthier individuals are better positioned to absorb rising costs. Data indicates that Americans earning $100,000 or more are more likely to intend to buy a home compared to lower-income consumers.
Real estate agents are observing that buyers with stretched budgets are stepping back from the market. Mortgage applications have fallen 16% compared to the same week last year, suggesting a pullback from those who rely on borrowing. Even cash buyers are reportedly being more cautious with their spending.