High mortgage rates and home prices threaten homeownership

Key Points:

• The average interest rate on a 30-year fixed mortgage has risen to 7.2%, the highest in 18 months, making homeownership less affordable amid near-record-high home prices averaging $429,100 nationwide.
• Mortgage rates have surged since late February, influenced by rising 10-year Treasury yields driven by increasing oil prices and recent geopolitical tensions, with the Federal Reserve signaling potential further rate hikes to combat inflation.
• Despite higher rates, housing inventory has increased to a 4.9-month supply, the highest in over a decade, offering buyers more negotiation leverage, though pending home sales have declined 4.7% over the past year due to affordability challenges.
• Elevated mortgage costs and broader inflation are causing many prospective buyers, especially younger adults, to delay purchasing homes; the median age of first-time homebuyers has reached a record high of 40.
• Potential buyers like Ian Sohan and Alexandra DeCandia express concerns about affordability and economic uncertainty, with some facing the prospect of moving farther from preferred neighborhoods or postponing homeownership altogether.