National interest rate hikes intended to fight inflation have made it even more difficult for first-time homebuyers to compete in a hot Midcoast housing market, according to local real estate brokers.

“Their buying power is down 30 percent because the rates are up 30 percent,” said Nancy Carleton, strategic growth and sales manager at William Reveis in Bath. “The impact of the interest has caused some first-time homebuyers to drop out (of the market).”

After interest rates sat close to zero throughout much of the pandemic, the Federal Reserve hiked them to a range of 1.5% to 1.75% in June, forcing Maine lenders to increase their rates accordingly. MaineHousing, a nonprofit housing authority that aims to offer first-time homebuyers rates around 1% below the rest of the market, has upped its rates from 2.85% in April to 4.99% today, according to Communications Director Scott Thistle.

For Mainers making the biggest purchases of their lives, those few percentage points can translate to tens of thousands of dollars.

“Even a quarter-point or a half of a point over the course of a 30-year mortgage adds up,” Thistle said. “It’s a lot of money.”

Out-of-state buyers have flocked to Maine in recent years to purchase houses, according to local realtors. With demand high and supply low, many prospective buyers have needed to quickly make offers above asking price or miss out on homes after only a few days on the market.

While interest rate hikes have recently helped bring the market down from its peak, Brunswick homes still stay on the market for fewer than 10 days on average and prices remain at an all-time high, according to realtor David Flaherty.

“It’s not even coming back to normal,” Flaherty said. “It’s just slowing down a tad.”

A year ago, the average sale price of a single-family house in Bath was about $259,000, according to Carleton. Today, it’s nearly $330,000, and fewer than 20 properties are usually available at any given time.

Homeowners looking to upgrade can afford the rocketing prices, as their existing property has increased in value during the housing boom, Carleton said. That leaves new buyers, who lean more heavily on mortgages, on the outside looking in.

MaineHousing, which aims to help middle- and working-class families buy homes, now offers first-time buyers $5,000 toward a down payment after taking a homebuyer education class, up from $3,500, according to Thistle.

“When we saw where the rates were going and where the Fed was going, we knew that we had to do something to counterbalance that,” he said. “MaineHousing remains committed to keeping our rates as low as we possibly can.”

The incentive has helped the organization attract the same rate of homebuyers in 2022 as in 2021, despite the higher interest rates, Thistle said.

Yet the lack of housing supply at every price point has choked the market, according to Topsham realtors Don and Sue Spann.

Few developers are building new affordable housing developments because of the high cost of materials, they said. And existing housing between $250,000 and $300,000 isn’t available, because the people living in those homes can’t find more expensive houses to move to.

“If there’s any stagnation at any level, you end up essentially affecting the entire ladder,” Don Spann said. “We have a lack of inventory at every level.”