Mortgage Rates Surge to 6.71%, Freezing US Housing Market

Elevated mortgage rates have plunged the U.S. housing market into a deep freeze, with the average 30-year fixed rate hitting 6.71% in April 2025, up 26 basis points from March, according to Zillow data.[1] This marks the largest one-week jump since April 2025 and the biggest three-week increase since October 2024, per Realtor.com, driven by economic uncertainty over tariffs and Middle East tensions impacting oil prices and inflation.[2][6] Freddie Mac reported the benchmark 30-year rate at 6.38% last week, up from 6.22% the prior week and a six-month high.[2] Home sales are cratering under the weight of these costs. Fannie Mae's Economic and Strategic Research Group forecasts existing home sales will remain near 1995 lows through 2025, hampered by the 'lock-in effect' where homeowners with sub-4% rates from the pandemic era refuse to sell.[4] Nationally, median home list prices reached $405,000 in March, up 13.5% year-over-year, but high rates are expected to slow price growth to 3.5% in 2025 from 5.8% in 2024, the group predicts.[3][4] 'Buyers simply cannot get a mortgage at these rates,' said NAR Chief Economist Lawrence Yun.[3] Affordability has deteriorated sharply: A homebuyer today pays about 47% more for the same property than a year ago when factoring in higher prices and rates, on top of inflation, gas, energy, and rent hikes, according to Freddie Mac Deputy Chief Economist Len Kiefer.[3] The lock-in effect and regional supply variances exacerbate challenges, with Fannie Mae's Mark Palim noting resilience in the labor market but persistent hurdles from a growing economy pushing rates higher.[4] Forecasts offer little relief. Fannie Mae sees 30-year rates at 6.20% by end-2025 and 6% in 2026; MBA predicts 6.70% this year and 6.40% next; NAR expects 6.40% in 2025 and 6.1% in 2026; Realtor.com anticipates 6.20% by year-end; and NAHB forecasts a 6.66% average in 2025, easing to 6.16% in 2026.[1] Freddie Mac warns rates may stay 'higher for longer,' potentially spurring delayed buyers back to the market.[1] Government spending and a push for a soft landing could keep rates in the 6.25-7% range beyond 2026, far above 2009-2019 lows.[5]