Market Data 
Mortgage rates soared this week, breaching the key 7% threshold and extending America’s home affordability crisis.
The 30-year fixed-rate mortgage averaged 7.10% in the week ending April 18, up from 6.88% the previous week, according to Freddie Mac data released Thursday. A year ago, the average 30-year fixed-rate was 6.39%.
Breaching 7% represents a psychological threshold that hadn’t yet been crossed this year.
Mortgage rates are climbing based on expectations that the Federal Reserve won’t cut interest rates anytime soon. The Fed doesn’t directly set mortgage rates, but its actions do influence them, and persistently hot inflation readings are keeping the Fed on hold.
“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year,” said Sam Khater, Freddie Mac’s chief economist, in a statement.
In a separate report, the National Association of Realtors reported that US home sales declined sharply in March in a sign that homebuyers are waiting on the sidelines as they contend with a tough housing market.
Fed officials have already signaled they expect fewer rate cuts this year than they previously thought, based on recent economic data showing that progress on inflation has essentially stalled. Some economists have floated the possibility that the Fed might not cut rates this year at all — and a couple of central bank officials have even mentioned the possibility of another rate hike.
That has sent bond yields soaring. Mortgage rates track the benchmark 10-year Treasury yield, which has risen to its highest level since November at 4.637%. The Consumer Price Index for March came in hotter than expected, weighing on the stock market and also prompting forecasters to push back their estimates for the first rate cut.
If inflation stalls any further, or even worsens, mortgage rates could climb higher this year.
“Homebuying is such a major decision that people have the calculator in front of them, so if it’s 7.01% then it’ll be an emotional shock, but nonetheless I think they’re going to plant a number into the calculator and see whether their monthly payment is manageable or not,” NAR chief economist Lawrence Yun said on a call with reporters Thursday.
Housing affordability is being stymied not just by high mortgage rates, but also by elevated home prices nationwide.
The median price of an existing home was $393,500 last month, NAR reported Thursday, an increase of 4.8% from a year earlier. That was the highest March price on record. February prices also reached a record high. Today’s housing market is tough by many measures, but Americans are also enjoying one of the strongest job markets in history.
This story has been updated with additional developments and context.
