Mortgage rates hit 7.2% as home prices stay near record highs, tightening affordability

The average rate on a 30-year fixed mortgage climbed to 7.2% this week, the highest level in 18 months, as home prices remained close to historic peaks. The rise follows a sharp increase in Treasury yields after geopolitical tensions and a recent Federal Reserve rate hike aimed at curbing inflation.

Nationally, the median home price stood at $429,100 in August, while inventory reached 1.62 million units, equivalent to a 4.9-month supply—the strongest level in more than a decade. Analysts say the higher supply gives buyers some negotiating leverage, but pending home sales fell 4.7% over the past year, reflecting reduced demand.

Realtors and economists note that the combination of higher borrowing costs and broader price pressures is causing many prospective buyers to postpone home purchases. > "It’s definitely impacting the psyche of the buyer," said Kerry Adams, a Compass Real Estate agent in Washington, adding that consumers feel the strain across fuel, groceries and now mortgage rates.

The trend is especially evident among younger adults. Data from Realtor.com show a record 25.2 million people under 35 lived with their parents last year, and the median age of first-time buyers has risen to 40, the highest on record. Prospective buyers such as 26-year-old Ian Sohan, who is looking for a home in Northern Virginia where prices range from $600,000 to $1 million, say the market feels increasingly out of reach.

While higher inventory offers some relief, continued Federal Reserve tightening could keep mortgage rates elevated, further challenging affordability for many Americans.