Mortgage Rates Stabilize at 7.01% as Housing Inventory Rises 20%

Mortgage rates in the United States have stabilized following a recent period of increase. As of May 19, 2025, the average refinance rate for a 30-year, fixed-rate home loan stands at 7.01%. This figure represents a holding pattern after a period of upward movement, providing a sense of relief for potential homebuyers and refinancers who had been navigating a volatile market.

The stability in mortgage rates comes at a time when the housing market is experiencing a rise in inventory. This increase in available homes is largely attributed to the construction boom during the COVID-19 pandemic, when mortgage rates were at historic lows. The rise in inventory has led to modest improvements in affordability in several markets, particularly in regions where listings have not only recovered but surpassed pre-pandemic levels. Even in Western states, listings have shown signs of rebounding.

However, the picture is more complex when viewed through the lens of income and purchasing power. While the total number of homes for sale has improved since the low point in 2021, many new listings remain out of reach for a significant portion of American households. This disparity is evident in the sluggish sales in the lower and middle price tiers, where high prices, elevated mortgage rates, and a lack of affordable options continue to squeeze buyers.

An analysis of the current housing market reveals that nationwide, for-sale inventory is up nearly 20 percent from a year ago. Middle- and upper-middle-income buyers, those earning between $75,000 and $100,000 annually, have seen the greatest improvement in affordable housing supply. Specifically, in March 2025, 21.2 percent of listings were within reach for these households, up from 20.8 percent in March 2024.

Despite this progress, the market is still far from pre-pandemic conditions. In 2019, buyers in this income bracket could afford nearly half of all active listings. A balanced market would offer them access to approximately 48.1 percent of listings, suggesting a shortage of nearly 416,000 listings priced at or below $255,000. At the lower end of the income spectrum, conditions have not improved and, in fact, have worsened. Buyers earning less than $50,000 per year, who are looking for homes priced under $170,000, now face even fewer affordable options than they did a year ago.

The analysis also highlights three types of local markets: areas getting closer to balance, areas stuck in the middle, and areas falling further behind. Areas getting closer to balance, which make up 30 percent of the 100 largest metro areas, have seen significant improvements in the availability of affordable listings. These markets have historically offered better alignment between home prices and local incomes and continue to maintain that balance. Areas stuck in the middle, which account for 44 percent of the 100 largest metro areas, are not in crisis but are struggling to keep up with demand. Areas falling further behind, making up 26 percent of the 100 largest metro areas, are seeing a decline in the availability of affordable listings or remain more than 20 percentage points below what would be considered a balanced market.

The rise in housing inventory is a positive development, but it is not enough to declare the housing market fully recovered. Many of the new listings are still not affordable for a large segment of buyers. To truly address the affordability crisis, a more targeted approach is needed—one that focuses on adding homes at the price points where demand is strongest and the gaps are greatest. This would involve supporting zoning reform, expanding down-payment assistance, removing barriers to entry-level construction, and investing in solutions that reflect the financial realities of today’s home buyers.