Sluggish Demand Persists Despite Slight Decline in Mortgage Rates
Mortgage rates have experienced a slight decrease this week, offering little solace to potential home buyers and sellers as demand in the housing market continues to stall. According to the latest Primary Mortgage Market Survey by Freddie Mac, the average rate for a 30-year fixed mortgage has dropped to 6.63%, down from 6.69% last week. However, this rate is still significantly higher than the 6.09% recorded a year ago. Similarly, the rate for a 15-year fixed mortgage has also edged lower, averaging at 5.94%, compared to 5.96% the previous week. This rate stood at 5.14% a year ago.
Existing Home Sales Plummeted to Lowest Level Since 1995 Last Year
The 30-year mortgage rates have remained within the mid-6% range for the past few months. Although there have been occasional signs of increased demand, the housing market activity has slowed considerably. The Mortgage Bankers Association (MBA) reported a decline in purchase applications last week, attributing it to the persistent low inventory that continues to drive up home prices, exacerbating the affordability crisis.
Record Number of US Renters Struggling with Unaffordable Housing Costs
Data from Realtor.com suggests that the modest drop in rates since October has sparked some growth in pending home sales and new home sales, as well as an increase in listings. However, the overall volume remains approximately 18% lower than the previous year, as elevated rates and high prices deter many potential buyers and sellers from participating in the market.
“Despite the promising increase in listing activity, inventory is likely to remain low as sellers may not respond as swiftly as anticipated,” stated Realtor.com economist Jiayi Xu. “A more substantial improvement in mortgage rates is necessary to attract more sellers to the market. If the supply of homes for sale fails to meet the demand from buyers, there is a possibility that prices may start to climb once again, further contributing to the persistence of higher home prices,” Xu warned.