The rise comes after mortgage rates briefly fell below 6% in late February. Since then, higher Treasury yields, inflation concerns and developments following the start of the war with Iran have pushed borrowing costs upward. Buyers are responding by delaying purchases, reconsidering their budgets or shifting toward alternative mortgage products as affordability becomes harder to manage.
Higher Borrowing Costs Are Weighing on Home Sales
According to Freddie Mac, the average 30-year fixed mortgage rate rose from 7.03% the previous week to 7.28%, its highest level since November 2023. A year earlier, the same mortgage averaged 6.34%. The 15-year fixed mortgage also increased, reaching 6.60% from 6.42% a week earlier.
The financial effect is substantial for borrowers. The Associated Press reported that the roughly one-percentage-point rise since late February translates into about $276 more each month for someone financing a $400,000 home loan at the current average rate. CBS reported a similar effect, estimating that recent increases added $283 to the monthly payment on a median-priced home.
Demand is weakening alongside those higher costs. According to the Mortgage Bankers Association, mortgage applications fell 6% during the week ending September 25, marking the fourth consecutive weekly decline. Applications include both loans used to purchase homes and loans used to refinance existing mortgages.
Existing-home sales have also remained subdued. The National Association of Realtors reported that sales fell 2% in August from July to a seasonally adjusted annual rate of 3.98 million homes, the slowest annual pace in more than a year. Sales of previously occupied homes were essentially flat last year at a 30-year low.
In Los Angeles, realtor Tracy Doe told CBS that attendance at her open houses had fallen by more than half compared with only a few weeks earlier, offering a local example of the broader slowdown in buyer activity.
Buyers Are Adjusting As Negotiating Conditions Change
Some prospective buyers are turning toward adjustable-rate mortgages, which generally begin with lower interest rates than traditional fixed-rate loans. According to the Mortgage Bankers Association, ARMs accounted for 10.3% of mortgage applications in the latest period, their highest share since October 2025.
Others are moving away from buying altogether, at least temporarily. Zillow chief economist Misha Fischer told CBS that some people begin their property searches intending to purchase a home but later switch to looking for rentals after confronting current prices and mortgage costs. These buyers may continue saving while waiting to see whether rates decline.
The slowdown is also changing negotiations. Fischer said buyers in some markets may have more negotiating power because fewer competing purchasers are active. Some home builders are offering mortgage-rate buydowns, allowing buyers to obtain financing below the prevailing market rate.
There are early indications of pricing pressure as sellers try to attract demand. KB Home senior vice president William Hollinger said softer market conditions and affordability pressures had contributed to pricing adjustments across several markets.
Rates remain closely connected to the 10-year Treasury yield, which rose from 3.97% in late February to 5.27% in midday trading on October 1. For now, higher financing costs continue to shape how Americans approach one of their largest purchases.
