After falling nearly half a percentage point last week, mortgage rates fell again this week.
The 30-year fixed-rate mortgage averaged 6.58 percent in the week ended Nov. 23, up from 6.61 percent a week earlier, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.10%.
Mortgage rates have risen through most of 2022, spurred by the Federal Reserve’s unprecedented campaign to raise interest rates to curb rising inflation. But last week, rates fell amid reports that indicated inflation had finally peaked.
“This volatility is making it difficult for potential homebuyers to know when to enter the market, and this is reflected in the latest data showing that the current Home sales are slowing at all price points.”
Average mortgage rates are based on mortgage applications that Freddie Mac receives from thousands of lenders nationwide. Only borrowers who put 20% down and have excellent credit are included in the survey. But many buyers with a small down payment or less than perfect credit will pay a higher than average rate.
Average weekly rates, usually released by Freddie Mac on Thursday, are being released a day earlier due to the Thanksgiving holiday.
Mortgage rates track the yield on 10-year US Treasury bonds. As investors see or anticipate rate hikes, they make moves that push yields higher and mortgage rates higher.
The 10-year Treasury has been hovering in the lower range of 3.7% to 3.85% since a pair of inflation reports indicating slower-than-expected growth in October were released about two weeks ago. That has caused a big shift in investors’ expectations about future interest rate hikes, said Daniel Hale, chief economist at Realtor.com. Earlier, the 10-year Treasury rose above 4.2 percent.
However, he said the market may be a little too early to celebrate the improvement in inflation.
At the Fed’s November meeting, Chairman Jerome Powell pointed to the need for continued rate hikes to control inflation.
“That could mean mortgage rates could go up again, and that risk increases if next month’s inflation rate is higher,” Hale said.
While it’s difficult to time the market to get a low mortgage rate, plenty of home buyers are seeing a window of opportunity.
“After generally high mortgage rates through 2022, the recent swing in favor of buyers is welcome and could save the average homebuyer more than $100 a month compared to when rates were above 7 percent. So they would have paid. Just two weeks ago,” Hale said.
As a result of lower mortgage rates, both purchase and refinance applications rose slightly last week. But refinance activity is still 80 percent below last year’s pace, when rates hovered around 3 percent, according to the Mortgage Bankers Association’s weekly report.
However, with week-to-week changes in mortgage rates nearly three times the average seen in a typical year and home prices still at historically high levels, many potential buyers have held back. Hale said.
“The long-term housing shortage is keeping home prices high, even as the number of homes for sale on the market increases, and making it more difficult for buyers and sellers to meet price expectations,” he said. “Can,” he said.
In a separate report released Wednesday, the U.S. Department of Housing and Urban Development and the U.S. Census Bureau said new home sales rose in October, up 7.5 percent from September, but down from a year ago. I was down 5.8 percent.
While this was higher than forecast and bucked a recent trend of falling sales, it is still lower than a year ago. Home construction has been at a historic low for a decade and builders are pulling back as the housing market shows signs of slowing.
“New home sales beat expectations, but a reversal of the general downward trend is now doubtful given high mortgage rates and builder frustration,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Despite the general trend of declining sales, new home prices are at record highs.
The median price of a newly constructed home was $493,000, up 15% from a year ago – the highest price on record.