M
ortgage rates have ticked up, but a home sales rebound is still possible. The 30-year fixed-rate mortgage averaged 6.81% this week, according to Freddie Mac, after the U.S. reached a tentative trade deal with China. However, significant rate drops are unlikely unless economic conditions worsen or tariffs are eliminated.

    Buyers' anxiety has eased as the economy stabilizes, which could lead to improved home sales in the coming months. The rollback on tariffs earlier this week boosted the stock market but didn't directly benefit homebuyers seeking financing. Mortgage rates have increased due to rising 10-year Treasury yields, driven by recent trade agreements with the UK and China.

    Few scenarios suggest significantly lower mortgage rates, said Chen Zhao of Redfin's economics research team. Rates are unlikely to fall unless tariffs are eliminated or a recession occurs, which would reduce housing budgets for many Americans. Elevated rates have hindered this year's slow homebuying season, but there is still optimism about sales rebounding in the summer.

    Inventory has risen and price growth slowed, making it possible for sales to pick up, according to Zillow's Kara Ng. Economic anxieties disrupted the start of the home shopping season, keeping some buyers on the sidelines. However, as uncertainty has eased, improved availability and affordability could lead to a rebound in the coming months.

    Mortgage applications have increased due to lower consumer anxiety and more homes available for purchase. Purchase applications rose 2% from last week and are 18% higher compared to the same period last year, according to the Mortgage Bankers Association. New listings continue to outpace home sales, with many metros experiencing year-over-year increases in newly listed properties.

    Despite these trends, builders remain less optimistic due to uncertainty around material costs. The National Association of Homebuilders' confidence index fell six points in May to 34, its lowest level since November 2023.