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The interest rate for the 30-year fixed-rate mortgage averaged 5.09% this week, continuing to inch down slightly. Still, rates are up significantly compared to a year ago. Due to the higher rates, home buyers need to earn about $30,000 more if they want to buy the typical home now compared to a year ago, Nadia Evangelou, National Association of REALTORS®’ senior economist and director of forecasting, writes on the association’s blog.

The higher rates are slowing the housing market. Mixed with higher home prices, home buyers are facing escalating costs that is affecting affordability. Existing-home sales have dropped for the last three months, according to NAR’s data.

“Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise, and the housing market is normalizing,” notes Sam Khater, Freddie Mac’s chief economist. “This is welcome news following unprecedented market tightness over the last couple years.”

Freddie Mac reports the following national averages with mortgage rates for the week ending June 2:

  • 30-year fixed-rate mortgages: averaged 5.09%, with an average 0.8 point, falling from last week’s 5.10% average. A year ago, 30-year rates averaged 2.99%.
  • 15-year fixed-rate mortgages: averaged 4.32%, with an average 0.8 point, rising slightly from last week’s 4.31% average. A year ago, 15-year rates averaged 2.27%.
  • 5-year hybrid adjustable-rate mortgages: averaged 4.04%, with an average 0.3 point, dropping from last week’s 4.20% average. A year ago, 5-year ARMs averaged 2.64%.

Freddie Mac reports commitment rates along with average points to better reflect the total upfront costs of obtaining the mortgage.