Mortgage rates near 7% tighten U.S. housing market, dampening buyer demand

The daily 30-year fixed mortgage rate jumped to around 7% last week, with Freddie Mac reporting a weekly average of 6.95%, the steepest level since early 2025. This rise follows the Federal Reserve’s recent rate hikes aimed at curbing inflation, raising borrowing costs across the economy. Mortgage applications for home purchases declined 19% compared with a year earlier, and Google searches for “homes for sale” were down 15%, reflecting reduced buyer enthusiasm.

The number of homes under contract fell to its lowest point in almost three years, and existing-home sales dropped 2% in August, pushing the annual sales pace below 4 million for the first time since June 2025. Although median home prices stayed high, sellers are increasingly offering concessions such as covering closing costs, yet price growth continues in most regions. First-time buyers now account for less than a third of sales, while cash-rich purchasers find it easier to compete in the market.