Home prices dipped in April for the first time in over a year as high mortgage rates and buyer fatigue upended the housing market’s fragile recovery.
At a Glance
- U.S. home prices fell 0.1% in April, the first drop since September 2022
- Mortgage rates remain high, hovering between 6.6% and 6.85%
- Supply has reached a five-year high as buyer demand falters
- New legislation proposes 3 million homes and first-time buyer support
- Affordability remains a major obstacle despite softening prices
Demand Collapses as Rates Remain High
The U.S. housing market’s spring season has cooled instead of bloomed. According to Redfin, national home prices ticked down by 0.1% in April, reflecting the strain of persistently high mortgage rates. Most 30-year mortgages are locked between 6.6% and 6.85%, a full 3% higher than the average rate on existing homeowner loans. This “rate lock” effect discourages sellers and buyers alike, as moving often means doubling one’s interest rate.
Watch a report: Interest Rates Impact on Housing
Supply Spikes, Affordability Worsens
Inventory has surged to a five-year high as unsold homes accumulate and sellers offer increasing concessions. But for many buyers, affordability remains out of reach. “Even with prices softening, affordability remains a major hurdle,” said Redfin’s Sheharyar Bokhari. Higher borrowing costs continue to erase any benefit from slight price drops.
The trend is particularly visible in southern metros. Prices fell most sharply in Charlotte, NC; Virginia Beach, VA; and Miami, while high-demand regions like Nassau County, NY bucked the trend with modest gains.
Policy Pivot: Can Legislation Close the Gap?
The American Housing and Economic Mobility Act is back on the docket, proposing construction of 3 million new homes and down payment assistance for first-time buyers. Lawmakers hope it will temper the housing crunch without waiting on rate cuts from the Fed or inflation relief. With Moody’s recent credit rating downgrade threatening to push mortgage rates even higher, urgency is growing.
Whether the proposed relief arrives in time remains uncertain. Until then, a standoff between high prices and wary buyers continues to chill the housing market across much of the country.
