High Mortgage Rates and Rising Prices Dampen Spring Homebuying Season in Washington

The spring homebuying season saw a slowdown as high mortgage rates and rising prices stifle the market, according to the latest report from the National Association of Realtors. Existing home sales dropped 1.9% in April to a seasonally adjusted annual rate of 4.14 million, with decreases seen across all regions of the country.

The median price of previously occupied homes rose to a record high of $407,600, marking the tenth consecutive increase. Lawrence Yun, the association’s chief economist, called the sales drop “a little frustrating” as economists had expected a higher number.

The report also notes that the supply of homes increased by 9% from March to 1.2 million, but remains low compared to pre-pandemic levels. Homeowners are hesitant to sell their homes due to the high mortgage rates, contributing to the tight inventory in the market.

Experts suggest that the housing market could see relief if the Federal Reserve cuts interest rates later this year. As of now, high prices and mortgage rates continue to deter potential buyers, especially those in lower and middle-income brackets.

Sales were stronger in the high-end market, with homes priced at $1 million or more seeing a 40% increase in sales compared to last year. Despite this, first-time buyers only accounted for a third of the sales, still below historical averages.

Overall, the housing market faces challenges as buyers grapple with high prices and interest rates, but there is hope for improvement with potential rate cuts in the future.