CNN: What's Next for US Housing Market…

The big surprise for those looking to buy a home during the first half of the year was how mortgage rates shot up so much, so fast. Interest rates for a 30-year, fixed-rate mortgage rose from 3.22% at the beginning of January to a high, so far this year, of 5.81% in June, according to Freddie Mac. In recent weeks, average rates have settled in around 5.5%.

“Someone buying the same house today that they wanted to buy last year will see a 50% increase in their monthly payment,” said Lawrence Yun, chief economist for the National Association of Realtors. “People’s incomes do not rise by 50% in a year. Homebuyers are frustrated. This year, they are in total disbelief that they don’t have the money to buy at a 6% mortgage rate.”

The cost of financing a home is so great that nearly 15% of people who signed a contract to buy a home in June backed out, according to Redfin. That’s the highest share of canceled home sales since April 2020, when the market all but stopped due to the pandemic.