Real Estate Investment 2025: High Mortgage Rates Continue to Stall the Housing Market

The American housing market is still stuck in a holding pattern, and the culprit isn’t a mystery—it’s the stubbornly high mortgage rates. Despite hopes that rates might ease in early 2025, homebuyers are still facing steep borrowing costs, creating a ripple effect that’s dragging down demand, slowing home sales, and leaving both buyers and sellers feeling uncertain (Real Estate Investment).

According to the latest data from Freddie Mac, the average 30-year fixed mortgage rate stood at 6.81% for the week ending April 24. That’s only slightly down from the previous week’s 6.83%, which saw the sharpest weekly increase since August of last year. While that may not seem like a huge jump at first glance, even a small rise in rates can significantly affect how much home buyers can afford—and whether they’re willing to buy at all.

Keep in mind that these rates don’t include points or fees, and they vary across regions. In many parts of the country, buyers may be seeing even higher numbers. Rates hovering in the high 6% range have been enough to keep many would-be homeowners on the sidelines, waiting for more favorable conditions. In fact, mortgage application activity has declined for two straight weeks, according to data from the Mortgage Bankers Association (MBA).

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“The notable drop in mortgage applications last week was the result of a 30 basis-point jump in mortgage rates over the last two weeks, driven by ongoing financial market volatility and economic uncertainty,” said MBA president and CEO Bob Broeksmit. “With rates now close to 7%, many potential borrowers in Real Estate Investment will likely stay on the sidelines until they have a better idea of the direction that rates, and the economy, are headed.”

These rising rates are just one part of the larger economic puzzle. Much of the recent unease is tied to the White House’s latest round of tariffs, which have rattled investors and pushed many to dump U.S. Treasury bonds and notes. As bond prices drop, yields—and by extension, mortgage rates—rise. The result? A more expensive borrowing environment that puts additional strain on homebuyers and the real estate investment market at large.

This volatility is already making itself known in the form of sharply falling home sales. The National Association of Realtors (NAR) recently reported that existing-home sales (Real Estate Investment) in March dropped dramatically. The annualized pace for the month was just 4.02 million homes—below the 2024 average, and the weakest performance since 1995.

Because there’s typically a one- to two-month delay between when a buyer makes an offer and when a sale officially closes, March’s dismal figures reflect decisions made in January and February—right when rates began their most recent climb. Buyers may have been hoping for a more favorable spring season, but the data suggests they’ve instead been spooked by economic headwinds.

Even more concerning is how long it’s now taking to sell a home. According to a recent report from Redfin, homes are sitting on the market longer than at any point since 2019. Bidding wars are becoming rare, and the competitive edge that sellers enjoyed during the pandemic-fueled housing boom has largely disappeared.

“Supply is climbing, demand is sluggish and some properties are overpriced,” Redfin noted. In other words, the market is out of sync. Sellers, still anchored to the high prices of the past few years, aren’t yet adjusting to the new reality. At the same time, buyers are wary of committing to major purchases amid an uncertain financial landscape.

Lisa Sturtevant, chief economist for Bright MLS, explains it this way: “At the beginning of the year, higher-than-expected mortgage rates held some buyers back. Over the past couple of months, rates have come down, but economic uncertainty and consumer anxiety have increased.” These shifting fears are now clouding what is typically the busiest season for real estate—the spring.

“While some buyers will take advantage of more listings and more room for negotiation, others will hold back, unwilling to make a big decision in these current uneasy times,” Sturtevant said.

This lack of confidence is also being felt by investors, and their skittish behavior is only adding fuel to the fire. Tariff policies, global tensions, and signs of a slowing economy have triggered a flight from safe assets like U.S. Treasuries, further pushing yields up and compounding the pressure on mortgage rates.

Elijah de la Campa, a senior economist at Redfin, captured the sentiment perfectly: “There’s a growing disconnect between what sellers think they can get for their homes and the direction the market is actually moving.” Buyers, worried about job security and the cost of financing, are increasingly unwilling to stretch their budgets, especially when inventory is no longer scarce.

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For many, it’s not just about affordability—it’s about confidence. If people don’t feel secure in their economic future, they’re less likely to make big financial decisions, and buying a home is often the biggest one they’ll ever make. This psychological aspect of the market is becoming harder to ignore.

So what does all this mean for the months ahead? It’s hard to say with certainty. If inflation cools and the Federal Reserve decides to cut interest rates, that could eventually lead to lower mortgage rates and improved buyer sentiment. But that scenario still feels a ways off. In the meantime, the housing market is stuck in a kind of limbo—too expensive for many buyers, and too unpredictable for most sellers to drop their prices.

What we’re seeing is a cautious pause. Buyers are waiting for clarity. Sellers are holding out for the right price. And the market, which once felt red-hot, now feels more like a slow burn.

Until we see a meaningful drop in rates—or a sudden change in economic outlook—the housing market will likely remain sluggish. And for anyone hoping to buy or sell in the near future, patience may be the only smart strategy for now.