This week, mortgage rates rebounded. According to data from Freddie Mac, the average rate for a 30-year fixed-rate home loan rose to 7.03% for the week ending May 30, up from 6.94% the previous week. This marks the first rebound after several weeks of decline.

Freddie Mac's chief economist Sam Khater stated, "After several weeks of decline, mortgage rates turned around this week." He pointed out that tougher talk on inflation and lukewarm demand for longer-term U.S. Treasury auctions caused a general rise in market yields. These factors, combined with recent economic signals, lowered market expectations for rate cuts, thereby pushing up mortgage rates.

When mortgage rates finally fell below 7% last week, this decline seemed to inject much-needed momentum into the real estate market this spring. Ralph McLaughlin, senior economist at Realtor.com®, noted in his latest analysis, "In response to rates returning to lower levels, more home sellers chose to list their homes, with the number of new listings increasing from the previous week."

According to the latest indicators from the Federal Reserve, mortgage rates are likely to remain high throughout the summer. Although the Fed's rates are not directly linked to mortgage rates, they typically move in the same direction. Previously, the market expected the Fed to cut rates three times this year, but now it seems there might only be one rate cut.

Realtor.com economist Jiayi Xu stated, "Earlier this year, the market expected the first rate cut to occur in March, but current economic data suggests that a rate cut before September is unlikely." She added, "Now more investors expect only one rate cut this year."

realtor.com

As of the week ending May 25, the median U.S. home price saw a slight year-over-year increase of 0.5%. McLaughlin stated, "This is the highest price increase since February this year." This marks the second consecutive week of price increases, following 11 weeks of zero or negative year-over-year growth. (In April, the median price for a mid-priced home was $430,000.)

McLaughlin explained, "In recent months, the growth in listing prices has remained modest due to more affordable homes being available compared to the same period last year." Although housing inventory has increased compared to last year, it remains below pre-pandemic levels and continues to support listing prices.

In the week ending May 25, new listings were up 3.6% from the same period last year. While any new home listings are good news, this week's data marks a slowdown from the 8.1% increase seen the previous week.

McLaughlin explained, "In early May, we saw sellers—many of whom are also buyers—cautiously withdrawing their home listings amid rising mortgage rates and slowing new home listings."

For buyers, the good news is that overall inventory grew 36.5% for the 29th consecutive week compared to the previous week as of May 25. McLaughlin said the increase in housing inventory "is the highest level since the early days of the COVID-19 pandemic in July 2020."

Buyers looking for the most homes for sale should head to the South, where housing inventory soared 43.0% year-over-year in April.

As of the week ending May 25, homes stayed on the market for two more days compared to the same period last year. (In April, a typical home stayed on the market for 47 days.) McLaughlin said, "Recent increases in mortgage rates have made both buyers and sellers more cautious, with homes selling slightly slower than last year." However, buyers should note that although homes may sell slightly slower than last year, overall sales are faster than pre-pandemic times as housing inventory returns to the market.

Jiayi Xu pointed out, "Many current homeowners report being 'locked in' by current mortgage rates, choosing not to sell and waiting for lower rates." She added, "Meanwhile, the increase in listings in recent months suggests that other sellers have adjusted their expectations and re-entered the market."