Mortgage rates ticked down again this week, continuing a series of declines since the end of October. The trend is beginning to spark signs of life in the stalled real estate market, but economists do not expect affordability to improve materially any time soon.
Freddie Mac's latest Primary Mortgage Market Survey released Thursday showed that the average rate for the benchmark 30-year fixed mortgage fell to 6.67% this week, down from 6.95% last week but still higher than 6.27% a year ago.
At the same time, the rate on the 15-year fixed mortgage fell, averaging 5.95% after coming in last week at 6.38%. One year ago, the rate on the 15-year fixed note averaged 5.69%.
"Lower rates are bringing potential home buyers who were previously waiting on the sidelines back into the market and builders already are starting to feel the positive effects," said Sam Khater, Freddie Mac’s chief economist. "A rise in home builder confidence, followed by new home construction reaching its highest level since May, signals a response to meet heightened demand as current inventory remains low."
Data from the National Association of Realtors shows existing home sales ticked up by 0.8% in November after five months of declines, and the Commerce Department reported housing starts surged 14.8% last month, signaling progress in the stagnant market.
Still, according to Realtor.com senior economic research analyst Hannah Jones, both buyer and seller activity remain near recent lows.
HOME SUPPLY WILL CONTINUE TO BE STRAINED IN 2024, ECONOMIST WARNS
"Though recent data signals a shift towards a more hospitable housing market, the return to balance will be slow," Jones said in a statement reacting to the latest mortgage rates. "Mortgage rates and home prices are well above pre-pandemic levels, and are projected to remain elevated through next year."
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Jones pointed out home prices remain elevated and the housing market remains under-supplied, noting the median listing price for a home in the U.S. in November was 37.7% higher than in 2019, while for-sale inventory was 34% lower than before the pandemic.
