This week, mortgage rates rose to their highest level since May 2024. The average rate on the 30-year fixed-rate mortgage went up three basis points to 7.07% in the week ending May 29, according to rates provided to NerdWallet by Zillow. A basis point is one one-hundredth of a percentage point.
This is the fourth week in a row that borrowers have seen increased mortgage rates. Home buyers must be exhausted by the word “uncertainty” at this point, but that’s exactly what continues to drive rates higher. Four months into the second Trump administration, we still don’t have a clear picture on how tariffs will affect the economy. And as the GOP’s “big, beautiful” tax bill threatens to grow the government’s deficit, a nervous bond market is nudging rates upwards.
While mortgage rates rise, many would-be home buyers are waiting on the sidelines.
As prices rise, home sales are falling
Existing-home sales fell 0.5% from March to a seasonally adjusted rate of 4 million in April, down 2% from the previous year, according to the National Association of Realtors’ latest report. Even as fewer buyers are willing or able to bite, sellers continue to score record-breaking prices. The median existing-home sale price hit $414,000 in April, up 1.8% from the same period in 2024. This marked the 22nd consecutive month of year-over-year price increases.
These rising costs have contributed to a growing stockpile of available homes as fewer shoppers can afford to buy. The average property remained on the market for 29 days in April, up from 26 days during the same period in 2024, according to the NAR report, and inventory was up 20.8% compared to last year.
A surprising buyer emerges
First-time home buyers are especially challenged in a tough housing market, since they won’t have equity from a previous home sale to help offset higher mortgage payments. According to recent data from ICE Mortgage Technology, the average first-time home buyer made a $49,000 down payment in March, compared to the $134,000 that repeat buyers brought to the table.
This makes it all the more pleasantly surprising that first-time buyers are actually gaining a stronger foothold: Data from the National Association of Realtors shows them representing 34% of sales in April compared to 32% the previous month and 33% the previous year.
One reason? First-time buyers don’t face the dilemma of giving up a low interest rate, compared to homeowners who “remain locked in the golden handcuffs of relatively low monthly payments on their existing homes,” said Andy Walden, Head of Mortgage and Housing Market Research for ICE.
ICE also found that Gen Z buyers accounted for one out of four first-time home buyers in the first quarter of 2025.
Gen Z buyers comprised over 30% of new homebuyer activity in less expensive markets with fewer financial barriers to entry, including Indiana, South Dakota and Kentucky. Comparatively, Gen Z buyers were less represented among first-time buyers in high-priced markets like Washington, D.C. (11%) and California (13%).
ICE’s data also shows that many first-time buyers are choosing loans backed by the Federal Housing Administration (called FHA loans), which have more flexible qualifications. If you’re planning on buying your first home, shop around with different lenders — and even different kinds of mortgages — to find the best fit for your needs and wallet.
