Another mortgage rate drop could be just what prospective borrowers need to get back into the housing market.
Nine basis points - how much the 30-year fixed-rate mortgage (FRM) fell by as of Thursday. Freddie Mac’s Primary Mortgage Market Survey indicated the 30-year FRM averaged 6.35% on August 29, down from 6.46% last week. The 15-year FRM averaged 5.51%, down from last week when it averaged 5.62%.
"Mortgage rates fell again this week due to expectations of a Fed rate cut,” Freddie Mac’s Chief Economist Sam Khater said. “Rates are expected to continue their decline and while potential homebuyers are watching closely, a rebound in purchase activity remains elusive until we see further declines."
Pending home sales fell 6.9% during the four weeks ending August 25, the biggest annual decline in nearly a year according to this report from Redfin.
“I expect more buyers and sellers to jump into the market in a few months, once everyone has a better understanding of how the new NAR rules will play out in actual real-estate deals,” said Fernanda Kriese, a Redfin Premier agent in Las Vegas. “The election and the drop in mortgage rates are also delaying buyers; a lot of them are waiting on the sidelines until November, hoping to get a lower rate and maybe more homes to choose from.”
Potential sellers are also staying on the sidelines, with 85.7% of U.S. mortgagees boasting an interest rate below 6%. That’s down from 90.6% at the start of last year and a record high of 92.8% in mid-2022, according to a report from Redfin.
“I have a dozen or so homeowners who would like to sell, but aren’t willing to give up their 3% interest rate for one that’s more than twice as high,” said Blakely Minton, a Redfin Premier real estate agent in Philadelphia. “Many of those sellers will list if rates get back down to 5%.”
A year ago at this time, the 30-year FRM averaged 7.18%, and the 15-year FRM averaged 6.55%.
