MINNETONKA, Minn. — For the first time since November, mortgage rates are back over 7%. This comes during a time of year when home buying is usually busy – now many are putting their plans on hold.
"Spring is the time that people are out and about and looking to move in Minnesota," Aaron Goldstein, owner of Gold Group Realty, said. "Probably 50% of the transactions at least happened in the springtime."
"I just think that it's taken people a little while to adjust to realize that this is the new reality," Goldstein continued.
It's a change in tone from a few months ago, when realtors in the Twin Cities told us they were hoping for the possibility of lower interest rates and a better outlook from the Federal Reserve. With rates back up, it's changing the conversation.
"What's surprising to me and for most people is just how quickly interest rates really went up," Goldstein said. "And the fact that prices haven't come down, right? That's just now now economics work, normally."
The National Association of Realtors released a report Thursday, showing home buying had it's largest monthly drop from February to March since 2022.
Selma Hepp is the chief economist at Corelogic, a California-based company focusing on residential property data. She says there are a number of factors that are causing buyers to pause, not just mortgage rates.
"I think inflation is persistent, and things are costing more," Hepp said. "The new sort of concerns in the market are cost of property insurance, that's gone up substantially in some markets."
Home prices are also rising, and could be another factor that is causing home buyers to take step back.
"Whenever we have a decline in affordability, that stalls some of that demand and people take a step back and, you know, start rethinking their decisions on buying a home," she said.
As for when we could see some relief – Hepp says it may take some time.
"When the Federal Reserve starts cutting rates is when we're going to see mortgage rates come down," she said. "It's not a one-to-one relationship, mind you, it's not, but it is an important driver of where mortgage rates will go in the future."
With a field as scarce as this one, Goldstein says you may not have time to wait for rates to drop, as home prices rise and inventory drops.
"Any house that lasts past the first weekend on the market, you definitely have a chance to negotiate, and you should be aggressive in trying to get yourself a deal," he said.
Hepp says another piece of this that may cause some to hold off is the settlement reached with the National Association of Realtors last month.
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