Home sales surge to the year’s fastest pace as mortgage rates climb back above 6.5 percent
Against every macro headwind, the housing market staged a small rebellion in May. Sales of previously occupied U.S. homes rose 3.2 percent from April to a seasonally adjusted annual rate of 4.17 million units, the fastest pace since December and a 3.2 percent gain from May of last year, the Associated Press reported.
The Wall Street Journal called it “the biggest rise this year.” The median sales price ticked up 1.3 percent from a year earlier to $429,300.
The rebound came in the teeth of rising rates. The national average 30-year fixed mortgage stood at 6.57 percent Tuesday, up 3 basis points from Monday and 3 basis points from a week earlier, with the 15-year fixed at 5.94 percent and the 5/1 ARM at 5.81 percent, The Wall Street Journal reported. The 30-year jumbo rate jumped 8 basis points in a single day to 6.74 percent.
Refinance rates were higher still, with the 30-year refi at 6.72 percent. Freddie Mac data show the 30-year fixed briefly dipped below 6 percent in late February before climbing back to roughly 6.5 percent by early April, CBS News reported, and has hovered there since.
No slippage expected
Fannie Mae, which had forecast earlier this year that rates would slip back below 6 percent by year-end, now expects them to remain above 6 percent for the remainder of 2026, The Wall Street Journal reported. With a CPI print likely to spook the rate market further and the Fed widely expected to hold its benchmark steady at its meeting later this month, the path back to a 5-handle on 30-year rates has gotten longer, not shorter.
Bloomberg has scheduled a Thursday live event titled “What Could Jumpstart the US Housing Market?” — a question many buyers and sellers are asking. The Tuesday data answered some of it: pent-up demand from a slump that began in 2022 is now strong enough to absorb six-and-a-half-percent mortgages.