Tuesday, May 5, 2026
Higher mortgage rates stall spring housing rebound
Higher mortgage rates cooled the housing market in April, slowing sales nationwide even as inventory rose -- but San Diego bucked the trend with rising sales and still-tight supply.
The U.S. housing market's spring momentum slowed in April as higher mortgage rates tempered buyer demand, even as more homes came onto the market, according to a new report from Zillow.
For the first time this year, the number of newly listed homes grew faster than sales, a sign that supply is beginning to outpace demand after a stronger-than-expected start to 2026.
Nationwide, more than 426,000 homes were newly listed in April, up 2.1% from a year earlier. By contrast, home sales were essentially flat, dipping 0.4% year-over-year. Active inventory rose 3.7% to about 1.3 million homes for sale.
The shift reflects a market that is gradually loosening after years of tight supply, giving buyers more options and slightly improved affordability -- though higher borrowing costs have made many cautious.
"The spring rebound we anticipated at the start of the year and that produced the stronger sales figures in March was put on pause in April by higher rates," Zillow chief economist Mischa Fisher said in a statement. "Still, someone who held off in 2025 hoping conditions would improve has seen that improvement. With more homes to choose from and lower monthly costs than a year ago, the math has shifted in favor of buyers even if the moment may not feel like it. There's still plenty of reason for optimism that we will see a quick rebound if rates cooperate."
The typical monthly mortgage payment fell 3.4% year-over-year to $1,829 in April, assuming a 20% down payment, even as home values edged up 0.7% to $366,712, Zillow found.
Homes are also taking slightly longer to sell. The typical listing went pending in 17 days, one day longer than a year ago. Price cuts remain relatively common, with 23.5% of listings reducing their asking price in April, according to the report -- down slightly from last year but still elevated by historical standards.
In San Diego, the market showed somewhat stronger demand than the national trend, even as home values softened.
The typical home value in San Diego was $938,900 in April, according to Zillow, which was down 0.9% from a year earlier but up 0.7% from March.
San Diego's housing inventory increased 1.5% compared with a year ago, a smaller gain than the national pace, suggesting supply remains relatively tight, the report found.
Sales activity in San Diego rose 2.4% year-over-year, bucking the slight national decline and pointing to continued buyer interest despite higher rates.
San Diego's rents also continued to climb. The typical monthly rent reached $2,914, up 1.5% from a year earlier and 0.4% from March.
Nationally, rents averaged $1,930 a month, marking a 1.9% year-over- year increase in April. Concessions -- such as free rent or discounted move-in costs -- were offered on nearly 40% of rental listings, highlighting continued competition among landlords.
Despite April's slowdown, Zillow economists said the housing market could rebound quickly if mortgage rates ease back toward the 6% range seen earlier this year.
For now, however, the housing market appears to be in a transitional phase, with improving supply conditions giving buyers more leverage, even as borrowing costs keep many on the sidelines.
For the first time this year, the number of newly listed homes grew faster than sales, a sign that supply is beginning to outpace demand after a stronger-than-expected start to 2026.
Nationwide, more than 426,000 homes were newly listed in April, up 2.1% from a year earlier. By contrast, home sales were essentially flat, dipping 0.4% year-over-year. Active inventory rose 3.7% to about 1.3 million homes for sale.
The shift reflects a market that is gradually loosening after years of tight supply, giving buyers more options and slightly improved affordability -- though higher borrowing costs have made many cautious.
"The spring rebound we anticipated at the start of the year and that produced the stronger sales figures in March was put on pause in April by higher rates," Zillow chief economist Mischa Fisher said in a statement. "Still, someone who held off in 2025 hoping conditions would improve has seen that improvement. With more homes to choose from and lower monthly costs than a year ago, the math has shifted in favor of buyers even if the moment may not feel like it. There's still plenty of reason for optimism that we will see a quick rebound if rates cooperate."
The typical monthly mortgage payment fell 3.4% year-over-year to $1,829 in April, assuming a 20% down payment, even as home values edged up 0.7% to $366,712, Zillow found.
Homes are also taking slightly longer to sell. The typical listing went pending in 17 days, one day longer than a year ago. Price cuts remain relatively common, with 23.5% of listings reducing their asking price in April, according to the report -- down slightly from last year but still elevated by historical standards.
In San Diego, the market showed somewhat stronger demand than the national trend, even as home values softened.
The typical home value in San Diego was $938,900 in April, according to Zillow, which was down 0.9% from a year earlier but up 0.7% from March.
San Diego's housing inventory increased 1.5% compared with a year ago, a smaller gain than the national pace, suggesting supply remains relatively tight, the report found.
Sales activity in San Diego rose 2.4% year-over-year, bucking the slight national decline and pointing to continued buyer interest despite higher rates.
San Diego's rents also continued to climb. The typical monthly rent reached $2,914, up 1.5% from a year earlier and 0.4% from March.
Nationally, rents averaged $1,930 a month, marking a 1.9% year-over- year increase in April. Concessions -- such as free rent or discounted move-in costs -- were offered on nearly 40% of rental listings, highlighting continued competition among landlords.
Despite April's slowdown, Zillow economists said the housing market could rebound quickly if mortgage rates ease back toward the 6% range seen earlier this year.
For now, however, the housing market appears to be in a transitional phase, with improving supply conditions giving buyers more leverage, even as borrowing costs keep many on the sidelines.
