Mortgage rates in the United States have dipped below seven percent for the first time in over a month, bringing a glimmer of hope for prospective homebuyers. The average rate for a 30-year fixed loan dropped to 6.94 percent, down from 7.02 percent last week, according to Freddie Mac's statement on Thursday. This marks the third consecutive week of declining rates.
Typically, the housing market sees a surge in activity during this time of year as warmer weather encourages more people to attend open houses. However, mortgage rates hovering near seven percent, coupled with rising home prices, have made it difficult for many buyers to afford properties. This has impacted sales, with transactions for previously owned homes falling for the second straight month in April, and new home sales also experiencing a decline.
The recent easing of rates, along with an increase in the inventory of homes for sale, may offer some relief to buyers. "Greater supply coupled with the recent downward trend in rates is an encouraging sign for the housing market," said Sam Khater, Freddie Mac’s chief economist.
The future of mortgage rates largely depends on the U.S. Federal Reserve's decisions on interest rates. Policymakers recently indicated that rates needed to remain higher for a longer period to combat inflation. However, there is some debate among officials about whether current policies are sufficient to achieve the Fed's inflation target of two percent. Jiayi Xu, an economist at Realtor.com, stated, "For rates to fall further below seven percent, there must be consistent evidence that inflation is on track to return to two percent."
As the housing market navigates these changes, potential buyers and sellers alike will be closely watching for further shifts in mortgage rates and inflation trends.
Comments