This week saw a slight dip in mortgage rates, offering limited relief to potential home buyers and sellers as demand remains largely stagnant. According to the recent Primary Mortgage Market Survey by Freddie Mac, the average rate for the 30-year fixed mortgage decreased to 6.63%, down from 6.69% the previous week but notably higher than the 6.09% reported a year ago.
Similarly, the 15-year fixed mortgage rate experienced a modest decline, averaging 5.94%, compared to 5.96% in the previous week. A year ago, the rate for the 15-year fixed note stood at 5.14%. Despite these marginal rate reductions, housing market activity has been slow for several months.
The Mortgage Bankers Association (MBA) reported a decline in purchase applications last week, attributing it to consistently low inventory levels that continue to drive up home prices, exacerbating the affordability crisis. Although there was a 1% drop in rates since October, leading to increases in pending and new home sales, along with a rise in listings, overall volume remains approximately 18% lower than a year ago. High prices and elevated rates are discouraging many potential buyers and sellers.
Realtor.com’s data suggests that while the drop in rates triggered positive trends in sales and listings, a more substantial improvement in mortgage rates is needed to attract more sellers to the market. If inventory fails to meet buyer demand, there’s a risk that prices may rise again, perpetuating the challenge of higher home prices.
“In other words, a more substantial improvement in mortgage rates is necessary to attract more sellers to the market,” said Realtor.com economist Jiayi Xu. “If for-sale inventory fails to meet the demand from buyers, there is a possibility that prices may start to climb once again, contributing to the persistence of higher home prices.”
