Mortgage rate relief? Not this year 

In bad, but not too bad, news for buyers, mortgage rates were nearly unchanged from last week, inching up just slightly. But it's a sign that rates will continue to sit above 7% heading into the slower fall and winter months.

The 30-year fixed-rate averaged 7.19% this week, up from 7.18%, according to the latest Freddie Mac survey. The 15-year fixed-rate also continued to climb, hitting 6.54%, up from 6.51% a week before.

Earlier this week, the Federal Reserve decided to pause short-term interest rate hikes for now, but they're unlikely to change course and lower rates anytime soon. That means elevated rates could be in place for a while, defying economist predictions from earlier this year.

Following the Fed's decision to pause rate hikes, the daily mortgage rate survey ticked up to 7.37%, according to Mortgage News Daily.

While rates in the 7% range are in line with historical averages over the past half century, they feel more painful in today's market because home prices continue to rise faster than incomes, said Lisa Sturtevant, chief economist for Bright MLS. That means demand should — in theory — decline.

"Supply may loosen up some as we head to the end of the year, but prospective homebuyers waiting for mortgage rates to come down should expect no major relief until next year," Sturtevant said.

There may be signs that supply is already starting to loosen up. In his weekly inventory update, Altos Research President Mike Simonsen noted that in the past week, inventory increased at a faster rate compared to the same week last year, and represented the biggest weekly increase in inventory so far this year.

That's notable because inventory usually starts to trend downward heading into fall.

One factor may be buyer expectations, Simonsen said. "Buyers early in 2023 had slightly lower rates than now and they were also optimistic that mortgage rates would go lower still … Now you're looking at seven and a half, imagining 8% or higher," he noted, adding that the "higher for longer" view of mortgage rates is working its way through the real estate market, further slowing sales.

Interestingly, mortgage applications got a significant bump last week despite mortgage rates remaining above 7%. Applications increased 5.4% from a week earlier, according to the Mortgage Bankers Association, which could be a sign that buyers who were on the fence about moving forward with a home purchase are concerned that rates may rise further.

Even with the one-week increase, applications are still down 26% compared to a year ago.