Rates Remain Stagnant, Homebuyer Sentiment Pessimistic
Mortgage rates have seen a slight increase this week, with the 30-year fixed rate note staying in the mid-6% range. This stalled housing market indicates that consumers are hesitant to make a move until rates come down. Data also reveals that homebuyer sentiment is overwhelmingly pessimistic at the moment.
Freddie Mac’s latest Primary Mortgage Market Survey released on Thursday showed that the average rate for the benchmark 30-year fixed mortgage rose to 6.64% this week, up from 6.63% the previous week. A year ago, the rate was at 6.12%. In contrast, the rate on the 15-year fixed mortgage dropped slightly to 5.9% this week, compared to 5.94% last week. A year ago, it stood at 5.25%.
“The economy and labor market remain strong with wage growth outpacing inflation, which is keeping consumer spending robust,” said Sam Khater, Freddie Mac’s chief economist. However, he also noted that rates “remain stagnant.”
Housing Market Challenges Continue
Affordability in the housing market remains a significant issue due to high home prices, elevated mortgage rates, and a low supply of available homes. This is particularly challenging for first-time and low-income homebuyers.
The latest Fannie Mae national housing survey, released on Wednesday, revealed that a record-high 36% of respondents expect rates to come down over the next 12 months. However, the majority of respondents believe it is best to wait until that happens before making any moves. Only 17% of those surveyed in January considered it a good time to buy a home, which is close to a historic low.
Despite the usual increase in housing market activity leading into spring, demand has actually fallen in recent weeks. The Mortgage Bankers Association reported a 1% decrease in applications for mortgages to purchase homes compared to the previous week. High mortgage rates continue to limit housing supply, resulting in a 19% decline in application volume compared to the same time last year.
As the housing market continues to face challenges, both buyers and sellers are waiting on the sidelines for rates to come down. Affordability and limited supply remain significant concerns for those looking to enter the market.