Mortgage rates rose sharply this week to their highest level since reaching a record near 6% in June, putting further pressure on the cooling housing market.
Freddie Mac said Thursday that its latest Primary Mortgage Market Survey shows the average rate for the benchmark 30-year fixed-rate mortgage is now at 5.55%, a nearly half-point jump from last week's reading of 5.13%.
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At this time last year, 30-year fixed-rate products averaged 2.87%.
The rate for a 15-year fixed-rate note also surged, averaging 4.85% after coming in at 4.55% last week. That is more than double the average rate at this time last year when 15-year products were at 2.17%.
"The combination of higher mortgage rates and the slowdown in economic growth is weighing on the housing market," said Sam Khater, Freddie Mac’s chief economist. "Home sales continue to decline, prices are moderating, and consumer confidence is low."
The National Association of Realtors reported this week that pending home sales dipped 1% in July from the month before, a 19.9% drop year over year to the lowest level since 2020.
New home sales tumbled last month to the lowest level since 2016, with the median price of a new home jumping 9% from the month before to $439,400.
Would-be buyers, already squeezed by inflation, are increasingly getting jitters over making a home purchase amid recession fears.
Redfin reported last week that home sale cancellations climbed in July to a two-year high of 63,000, equal to 16% of the homes that went under contract that month.
But Khater says there are still people shopping for homes, adding, "amid waning demand, there are still potential homebuyers on the sidelines waiting to jump back into the market."
FOX Business' Megan Henney contributed to this report.