Mortgage rates are creeping closer to the 7% mark, adding pressure on home buyers across the United States. For the week ending May 22, the average rate for a standard 30-year fixed mortgage reached 6.86%, marking the highest level since mid-February, as reported by Freddie Mac.

The rise in mortgage rates reflects growing concerns about the national debt. Recently, the benchmark 10-year Treasury yield has risen, a trend that correlates closely with mortgage rates. This shift follows Moody’s downgrade of U.S. federal debt from its top rating, which has triggered anxiety among investors about potential increases in the country’s debt from proposed tax legislation.

As borrowing costs climb, the traditionally busy spring home-buying season has already shown signs of a slowdown. Sales of previously owned homes fell by 0.5% last month on a seasonally adjusted basis. According to the National Association of Realtors, this represents the slowest growth rate since April 2009.

Despite the dip in sales, home prices continue to rise. The median price of existing homes increased by 1.8% from April 2024, reaching $414,000, a record high for that month. This marks the 22nd consecutive month of year-over-year increases in home prices, suggesting continued demand despite the unfavorable borrowing conditions.

Economic uncertainty has further complicated the spring buying season, particularly due to unpredictability surrounding tariff policies. Data from Redfin indicates that approximately one in every seven home-purchase agreements failed last month, reflecting growing buyer hesitance.

In a balance of factors, mortgage rates were slightly lower this time last year, which some believe could improve affordability for prospective buyers. Kara Ng, a senior economist at Zillow, noted that while current rates are still elevated, they are more favorable compared to 6.94% recorded a year ago.

Additionally, the market is presenting more options for buyers. The inventory of homes available for sale reached 1.2 million in April, nearly 20% higher than the previous year. Increased availability may provide some relief for those actively seeking homes amid rising rates.

Looking ahead, Ng expressed a cautious optimism about the potential for home sales to rebound if household financial uncertainties lessen. However, she warned that any advantage in affordability could quickly diminish if mortgage rates continue their upward trajectory.