Freddie Mac announced Thursday that rates on 30-year fixed mortgages averaged 6.39 per cent for the week ending May 4. This is only a fraction lower than last week's 6.43 per cent, but many expect mortgage rates to fall even lower later this year.

However, even with the recent drop, interest rates are still high enough to make home ownership too expensive for many Americans. What's more, many economists increasingly believe that the central bank's endless rate hikes - 10 since March 2022 - have been bad for the economy, especially after the recent collapse of First Republic Bank.

"The Fed's latest rate hike is unnecessary and harmful," said Lawrence Yun, chief economist for the National Association of REALTORS®, in a statement following Wednesday's Fed meeting.

"Consumer price inflation has been decelerating and will continue to do so," Yun explained." There has been a significant amount of additional monetary policy tightening that has occurred."

Given the shaky state the banking system is now in, Yun is concerned that the Fed may have gone too far.

"The Fed's rapid rate hikes have upended the balance sheets of many smaller regional banks," he continues." They are becoming zombie banks, unable to even lend to good businesses because they are more concerned with balance sheet cleansing for survival."

This may also mean that these zombie banks cannot offer as many home loans to eligible buyers?

Here are our latest edition of "How was the housing market this week?" with housing statistics and expert views.

With the economy in turmoil and mortgages becoming increasingly difficult to obtain, the housing market remains in a state of petrified limbo.

"Mortgage rates remain a big wild card for buyers and sellers as they are highly sensitive to incoming data and recent developments in the banking sector," says Danielle Hale, chief economist at Realtor.com®, in her weekly analysis." In the midst of all the economic and financial whirlwind that could worsen in the coming weeks as the U.S. approaches the debt ceiling, the housing market continues its slow march at relatively low levels of activity."

All this and housing prices still haven't stopped climbing: in the week ending 29 April, listing prices rose by 2.4% compared to last year. With the median price of a home hovering at $430,000 in April, it's no surprise that homebuyers are tired and wary of overextending themselves financially.

High mortgage rates continue to cast a shadow over not only buyers, but sellers as well.

A recent Realtor.com seller survey found that 82 per cent of potential sellers are concerned about "rate lock", or having to swap their current ultra-low rates for higher rates if they sell their home and then try to buy it again.

In the week ending April 29, 22 per cent fewer new listings came on the market than in the same period last year. This downward trend has been going on for 43 weeks, roughly the same time as the Federal Reserve's interest rate hike.

Homes have stayed on the market longer for almost the same amount of time, staying on the market 18 days longer in the last week of April than they did a year ago.

"The housing market in 2023 is nowhere near the frenzy experienced over the past two years," Hale noted." In other words, sellers don't have all the advantages that they did in the past two years, but they're still in a very good position."

Buyers, perhaps not so much.

Still, Hale is half-hearted: "Even if the market momentum continues to lag behind the past few years," she says, "the next few weeks hold plenty of seasonal opportunities for buyers who want to see some new options."