The average long-term U.S. mortgage rate rose this week after declining for the past three weeks, according to weekly data compiled by mortgage buyer Freddie Mac.
The rate on the 30-year fixed mortgage rose to 6.71% this week from 6.67% a week ago. One year ago, it averaged 5.70%.
"Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year," said Sam Khater, Freddie Mac’s chief economist.
Suburb housing development in Texas viewed from above. | iStock
Meanwhile, the average rate on a 15-year fixed mortgage was up this week at 6.06%. Last week it averaged 6.03%. A year ago at this time, the 15-year fixed-rate mortgage averaged 4.83%.
Khater continued that, "New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction. The improved demand has led to a firming of prices, which have now increased for several months in a row."
The dearth of properties on the market is also a key reason home sales have been slow this year. Last month, sales of previously occupied U.S. homes were down 20.4% from as year earlier, marking 10 consecutive months of annual declines of 20% or more, according to the National Association of Realtors.
Low mortgage rates helped fuel the housing market for much of the past decade, easing the way for borrowers to finance ever-higher home prices. That trend began to reverse a little over a year ago, when the Federal Reserve began to hike its key short-term rate in a bid to slow the economy to lower inflation.
Global demand for U.S. Treasurys, which lenders use as a guide to pricing loans, investors’ expectations for future inflation and what the Fed does with interest rates influence rates on home loans.
The Associated Press contributed to this report.