The average rate for a 30-year fixed U.S. mortgage dropped to 6.77% this week, its lowest level since early May, according to Freddie Mac. This marks a slight decline from last week\u2019s 6.81% and offers some relief for prospective buyers facing a still-stagnant housing market. A year ago, the same loan averaged 6.86%.<\/p>\n\n\n\n
Shorter-term rates also eased. The average 15-year mortgage rate fell to 5.89%, down from 5.96% last week and below the 6.16% recorded a year earlier. These rates, often used by refinancing homeowners, remain significantly elevated compared to pandemic-era lows but have inched downward amid recent declines in bond yields.<\/p>\n\n\n\n
High borrowing costs continue to weigh heavily on the housing sector. Mortgage rates hovering near 7% since early 2023 have priced many potential buyers out of the market, contributing to a deep slump in existing home sales. In 2023, sales fell to their lowest level in nearly three decades, and activity remains subdued in 2024.<\/p>\n\n\n\n
The new-home market is also under pressure. Sales of new single-family homes fell nearly 14% in May, according to government data. While home prices have cooled slightly, they remain high in most regions, compounding the impact of elevated rates on affordability.<\/p>\n\n\n\n
Some forward-looking indicators suggest modest improvement. Pending home sales rose 1.8% in May and were up 1.1% from a year earlier, according to the National Association of Realtors. This may signal a small uptick in future closings as more buyers enter contracts amid slightly improved financing conditions.<\/p>\n\n\n\n
\u201cStuck in a bit of a rut, the housing market continues to suffer from high home prices and elevated mortgage rates,\u201d said Hannah Jones, senior economic research analyst at Realtor.com. \u201cHowever, climbing for-sale inventory in much of the country could help soften upward price pressure and usher in a more friendly housing market for buyers.\u201d<\/p>\n\n\n\n
Mortgage rates are closely linked to the 10-year U.S. Treasury yield, which recently fell to 4.28%, down from 4.58% just weeks earlier. Rates have declined for four straight weeks, mirroring this trend. The current average mortgage rate is now slightly above this year\u2019s low of 6.62%, reached in April, and well below the mid-January peak of just over 7%.<\/p>\n\n\n\n
Mortgage applications rose 1.1% last week, suggesting some renewed buyer activity. Economists expect rates to remain range-bound between 6% and 7% through the remainder of the year, barring major shifts in Federal Reserve policy or economic indicators.<\/p>\n\n\n\n
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