The spring housing market is beginning to lose momentum as rising mortgage rates push more buyers to the sidelines, according to new data from Redfin.
Pending home sales in the U.S. fell 1.1% during the week ending May 17, marking the first weekly decline since early April. While pending sales remain near their highest levels since 2022, the latest shift signals that the brief rebound seen earlier this spring may be fading as borrowing costs rise again.
The average daily mortgage rate climbed to 6.75% this week, the highest level since July, after dipping into the low 6.3% range in April. Redfin said the increase has been tied in part to global market uncertainty surrounding the war involving Iran and the ongoing closure of the Strait of Hormuz.
Mortgage purchase applications also dropped 4% week-over-week, another sign that higher borrowing costs are cooling demand. At the same time, median asking prices continued to rise, increasing 1.4% from a year ago to more than $403,000 nationally.
“Higher mortgage rates are scaring off some buyers, but that’s opening the door for others,” Redfin economics research head Chen Zhao said in the report. Zhao said buyers with stable incomes may now have more leverage to negotiate prices and concessions from sellers in what Redfin describes as an increasingly buyer-friendly market.
Despite softer demand, inventory remains relatively tight. Active listings rose 1.4% year-over-year, while new listings slipped 0.5%, marking the third consecutive weekly decline. The market currently has about 3.5 months of housing supply, still below the four-to-five-month range typically considered balanced.
Homes are also sitting on the market longer. The median home spent 41 days on the market during the four-week period ending May 17, up three days from a year ago. Meanwhile, the share of homes selling above asking price declined to 27.1%.
Several metro areas saw major swings in activity. San Francisco posted the largest annual increase in median sale prices among major metros at 9%, while Miami recorded the biggest decline at 2.5%. West Palm Beach saw the largest jump in pending sales, rising 34.4% year-over-year.
The report suggests the housing market remains highly sensitive to interest rates after several years of affordability pressures. Buyers briefly returned this spring when rates dipped, but that momentum appears vulnerable as monthly mortgage costs rise again.
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