Biden has nearly destroyed the housing market, and yet rates drop as no one is buying homes.
The average interest rate for the highly sought-after U.S. 30-year fixed-rate mortgage has plummeted to its lowest point since mid-March, a potentially game-changing development for a housing market that’s been on shaky ground. Freddie Mac announced on Thursday that the 30-year fixed-rate mortgage averaged 6.77% for the week ending July 18, a drop from 6.89% the previous week. This marks a significant decrease, hovering just below last year’s average of 6.78% for the same period.
Key U.S. mortgage rate drops to lowest since March, Freddie Mac says https://t.co/h4ZNTnUeYT pic.twitter.com/rt4MTbDlzV
— Reuters (@Reuters) July 18, 2024
Despite this drop, homebuyers seem hesitant to leap into action. Purchase application demand remains about 5% lower than it was in the spring. Freddie Mac’s Chief Economist, Sam Khater, offers an explanation for this unexpected trend: buyers may be waiting to see if rates will drop even further before making their move.
The housing market has been one of the most impacted sectors by the Federal Reserve’s interest rate hikes that began in early 2022. This year, existing-home sales have plunged to levels not seen since 1995, and the supply of homes for sale remains tight. Many homeowners are reluctant to sell because their current mortgages are locked in at significantly lower rates, and purchasing a new home would mean taking on a higher rate and additional costs. This inventory squeeze continues to keep home prices elevated.
Economists are optimistic that the Federal Reserve might begin cutting rates as early as September, a move that could help alleviate borrowing costs and support the housing market’s recovery in the months ahead.
Yet, the signals regarding the market’s recovery are conflicting. While overall housing starts saw a 3.0% increase in June, this rise was primarily driven by apartment construction. Conversely, single-family home construction fell to its lowest point in eight months, as reported by the Census Bureau on Wednesday.
Average rate on a 30-year mortgage drops to 6.77%, sliding to lowest level since March@karenhunter #KarenRebels #ThriveThursday https://t.co/Mgi9x8jeJB.
— SiriusXM Urban View (@UrbanViewRadio) July 18, 2024
Next week, the National Association of Realtors will release data on existing home sales for June. As of May, sales of pre-owned homes had declined for three consecutive months, highlighting the ongoing struggles within the housing market.
Major Points:
- U.S. 30-year fixed-rate mortgage drops to 6.77%, its lowest since mid-March.
- Homebuyer demand remains 5% below spring levels despite lower rates.
- Housing market severely impacted by Federal Reserve’s interest rate hikes.
- Homeowners hesitant to sell due to lower-rate existing mortgages, keeping inventory tight.
- Economists hopeful Fed rate cuts will boost housing market, but recovery signals remain mixed.
Charles William III – Reprinted with permission of Whatfinger News
