Mortgage rates in the US continued their slide, dropping to the lowest level since June and bolstering hopes for a housing rebound in the new year.
The average for a 30-year, fixed loan was 6.67%, down from 6.95% last week, Freddie Mac said in a statement Thursday.
Borrowing costs have fallen each week since peaking at 7.79% in late October. The decline is welcome news for would-be homebuyers who’ve been postponing purchases in one of the least-affordable housing markets on record. Many economists expect demand for homes to increase and mortgage rates to slip further as the Federal Reserve winds down its inflation-fighting campaign.
“Lower rates are bringing potential homebuyers who were previously waiting on the sidelines back into the market,” Sam Khater, Freddie Mac’s chief economist, said in the statement.
Sales of previously owned homes increased in November after five months of declines, according to the National Association of Realtors. Because the index measures closed deals — potentially contracts that were signed when borrowing costs were at two-decade highs — the uptick signals “a shift in buyer activity as mortgage rates fall,” said Hannah Jones, senior economic research analyst at Realtor.com.
While transactions remain near recent lows, “each small win in affordability thaws the market slightly,” Jones said.
Buyers still face a critical shortage of existing homes for sale, an inventory crunch that has kept prices high. Homebuilders have helped to fill the void, often offering customers discounted mortgages and other incentives.
This article was provided by Bloomberg News.