Rates Went Up. Buyers Bought Anyway.

For two years the script was simple. Rates would drop. Buyers would show up. Repeat.

This week broke that script. The 30-year fixed climbed for the second week in a row, hitting 6.37% (Source: Freddie Mac PMMS). And pending home sales hit their highest level since September 2022 (Source: Redfin).

Buyers stopped waiting. That's the story.

The 30-year fixed averaged 6.37% this week, up from 6.30% last week (Source: Freddie Mac PMMS). Second straight weekly increase. Driven by Middle East tensions pushing oil prices and Treasury yields higher.

On a $400K loan, that 7-basis-point jump adds about $20 a month. Not life-changing. But the direction matters more than the size right now.

The MBA survey, which moves a day faster than Freddie Mac, already had the contract rate at 6.45% by the week ending May 1, the highest in a month (Source: Mortgage Bankers Association). Purchase applications fell 4% week over week.

One more thing worth flagging from the MBA data. The average purchase loan size hit a record $467,300 (Source: Mortgage Bankers Association). When applications fall and the average loan size hits a record, that means entry-level buyers are stepping back while higher-priced buyers keep transacting. Worth keeping in mind as you read the rest of the brief.

Pending home sales rose 7.7% year over year in the four weeks ending May 3, the strongest reading since September 2022 (Source: Redfin). Pending sales declined in just 4 of the 50 largest metros. So this isn't a regional fluke.

Chicago led the country at +19.2% year over year (Source: Redfin). Pittsburgh, San Francisco, Miami, and Austin rounded out the top five.

But here's the catch. The typical home still takes 43 days to go under contract, three days longer than a year ago. Only 26.4% of homes that went under contract sold above asking, the lowest share for this time of year in five-plus years (Source: Redfin).

More buyers are showing up. They just aren't bidding everything up.

That last line is important. The path to lower mortgage rates from here runs through either a Middle East ceasefire or a meaningfully worse job market. Neither is a great thing to bet on if you're house hunting.

The misconception: in a buyer's market, every house is up for negotiation. Find a fixer in a good neighborhood, lowball, renovate, build equity. Easy.

The reality this week: even with sellers outnumbering buyers, updated homes are pulling multiple offers while dated ones sit. The market is splitting into two pools, not softening uniformly.

Two things to do with that. First, the spread between turnkey and renovation-needed comps is wider than it looks on Zillow. The fixer at 15% below the move-in-ready comp may be priced exactly right, not a deal. Second, the renovation math itself is getting harder. Tariff pressure on building materials and a softening residential construction labor market mean longer timelines and higher costs than a year ago.

The fixer-upper plan still works. The discount you need to make it work is bigger than it used to be.

Smart buyers are noticing where the action actually is. Chicago's pending sales jumped 19.2% year over year, the largest year-over-year gain of any of the 50 most populous U.S. metros (Source: Redfin). And it's not a Sun Belt rebound story. Pittsburgh, San Francisco, and Miami are right behind it.

Sellers are doing something different too. The share of sellers cutting prices actually declined year over year in April, while median list prices fell for the sixth straight month (Source: Realtor.com via Real Estate News). That's sellers pricing realistically up front instead of chasing the market down with cuts later.

Translation. The "list high, see what happens, cut every two weeks" strategy is fading. The list price you see this spring is closer to the real number than it has been in a long time. Lowballing 15% under list is a worse strategy now than it was a year ago.

This is based on market expectations, not confirmed outcomes.

As of May 9, Polymarket's "How many Fed rate cuts in 2026?" contract is pricing zero cuts at 55.9% and one 25-basis-point cut at 20.5% (Source: Polymarket). Markets are leaning toward no cuts at all this year.

For the June 16-17 FOMC meeting specifically, Kalshi traders are pricing roughly a 70% chance the Fed holds at 3.50% to 3.75%, with a 28% chance of a 25-basis-point cut (Source: Kalshi). Current probabilities suggest a fourth straight hold.

Here's the read for buyers. Even if the Fed does cut, mortgage rates track the 10-year Treasury, not the fed funds rate directly. Markets are pricing in a higher-for-longer environment that pulls in the same direction. The "wait until rates drop into the 5s" thesis is now a bet against where the consensus is sitting.

That doesn't mean rates can't fall. It means the path to meaningfully lower mortgage rates probably runs through a worse economy, not a friendlier Fed.

That's the brief for this week. We pulled the rate data, the housing data, and the market expectations into one place so you don't have to. Reply with questions, we read everything.

A few moments worth keeping an eye on. None of these require action. They're just the events most likely to move rates, headlines, or market sentiment between now and mid-May.

That's everything worth knowing this week.

If a friend is house hunting, send this their way. We'll do the work so they don't have to.

Back next Friday.

— PropScroll