What's driving up the cost of buying a house?

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**Kimberly Adams** (0:31)
What's driving up the cost to buy a house? And does AI mean the end of the open Internet?
From Marketplace in Washington, I'm Kimberly Adams. The latest news on mortgage rates, crucial to the housing market, to would-be buyers and sellers, is not great. According to Freddie Mac, the average interest on a 30-year fixed rate mortgage edged up again last week to 6.66 percent. That puts the cost of borrowing to buy a new home at the highest level we've seen in a year. Marketplace's Mitchell Hartman explains what's going on.

**Mitchell Hartman** (1:03)
One year ago, the 30-year mortgage was just above 6.5 percent, almost exactly where it is today. And a lot of economists were confident rates were headed down.

**Chen Zhao** (1:14)
You know, I also expected mortgage rates to come down. So I guess I would have to take the stand that it was reasonable.

**Mitchell Hartman** (1:19)
Chen Zhao at Redfin was right for a while.
By February, the rate had dipped below 6 percent, as the job market weakened, inflation fell, and it seemed likely the Fed would begin cutting rates to stimulate growth. But then, the Iran War disrupted global oil supplies.

**Chen Zhao** (1:37)
And that was a shock that sort of came out of left field.

**Mitchell Hartman** (1:40)
Oil prices and inflation soared. And paradoxically, the US economy came out of its slow growth funk.

**Chen Zhao** (1:48)
The labor market has really turned around. The AI boom is actually providing a lot of resilience, but it's also providing inflationary pressure.

**Mitchell Hartman** (1:56)
Pressure that's driving investors to demand higher interest on long-term debt, like mortgages. For the housing market, stronger economic growth is a double-edged sword, says Douglas Porter at the Bank of Montreal.

**Douglas Porter** (2:08)
It can help employment. It can help the potential homebuyer have a little bit more confidence in making that plunge. But of course, it does put upward pressure on interest rates.

**Mitchell Hartman** (2:17)
Making homes less affordable, driving some buyers out of the market. I'm Mitchell Hartman for Marketplace.

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**SPEAKER_7** (3:42)
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**Kimberly Adams** (4:13)
Last quarter, Google's parent company Alphabet reported a 24% increase in year-over-year revenue, largely driven by AI demand for infrastructure and solutions. Also gaining in popularity, the use of Google Search in AI mode. But the way AI Search works is causing growing concerns that the World Wide Web might be becoming less open. Marketplace's Megan McCarty Carino has been covering web traffic and the growing role of AI in Search. She joins me now. Hey, Megan.

**Megan McCarty Carino** (4:45)
Hey, good to be here.

**Kimberly Adams** (4:46)
When Google first came out, it was supposed to be this gateway to the Internet that many people had never experienced at that point. But how is Google's use of AI in Search rolling out?