Mortgage rates slid to the lowest level since June this week after shifting market expectations drove Treasury yields lower. Data suggest the recent declines in rates haven’t drawn buyers back to the market—yet.
The average 30-year fixed-rate mortgage was 6.67% as of Thursday, according to
Freddie Mac.
The reading continues an eight-week slide from rates’ peak at 7.79% in late October.
“The 30-year fixed-rate mortgage remained below 7% for the second week in a row, a welcome downward trend after 17 consecutive weeks above 7%,” Sam Khater, Freddie Mac’s chief economist, said in a statement. Builder confidence has increased as mortgage rates have fallen, he noted.
Mortgage rates have pulled back significantly in December, dropping more than half a percentage point since the last reading in November. The Federal Reserve earlier this month suggested it would cut interest rates in 2023, igniting a bond rally that drove the 10-year Treasury yield, with which mortgage rates often move, lower.
Applications for home purchase loans, a leading indicator of future home sales, have come off their recent lows—but buyers didn’t seem to respond much to the recent drops. “Mortgage rates declined last week to their lowest level in six months, but applications for refinances and home purchases fell slightly for the first time in seven weeks,” Mortgage Bankers Association President and CEO Bob Broeksmit said in a statement.
That could change after the typically-slow winter home buying season. The trade group expects both new and existing-home sales to improve in 2024 as more listings hit the market and mortgage rates pull back, he said.
Buyers might still be scarce—but sellers could be reentering the market, home listings website and brokerage
Redfin
said Thursday. Redfin said more homeowners are contacting the company about selling their homes than at the same time last year, and new listings are 9% higher than year-ago levels.
A dearth of previously owned homes for sale is among the factors that weighed on home sales this year, sending the National Association of Realtors’ measure of completed transactions in October to 13-year lows. More homes on the market means more options for buyers—and, ultimately, more completed existing-home sales.
“The last week of economic news and data makes it more likely than not that mortgage rates have peaked,” Redfin economic research lead Chen Zhao said in a statement. “Buyers will return from the holidays with more homes to choose from, and they should still see rates in the mid-6% range.”
Write to Shaina Mishkin at [email protected]
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