The rise in mortgage rates appears to have put a damper on home sales, at least in the short-term. Sales fell 3% from the previous month, and while this is typical for May, it’s the first time since 2020 that sales have declined in May. The tight housing market continues to be a problem for potential buyers, as the inventory of homes for sale remains low. New listings are also down, which means that buyers are likely to face even more competition for the few homes that are on the market.
In the long run, rising interest rates may help to cool the housing market and bring prices back down to a more sustainable level. For now, though, it appears that buyers will continue to face challenges in finding affordable homes.
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