The 30-year fixed-rate mortgage (FRM) decreased for the sixth straight week, from last week’s average of 7.22% to an average of 7.03% this week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 7.03%, down from last week when it averaged 7.22%. A year ago at this time, the 30-year FRM averaged 6.33%.
- 15-year fixed-rate mortgage averaged 6.29%, down from last week when it averaged 6.56%. A year ago at this time, the 15-year FRM averaged 5.67%.
“The 30-year fixed-rate mortgage averaged near 7% this week, down from nearly 7.80% just six weeks ago,” said Sam Khater, Freddie Mac’s Chief Economist. “When rates began to rapidly drop, purchase applications rebounded initially, but this improvement in demand diminished in the last week. Although these lower rates remain a welcome relief, it is clear they will have to further drop to more consistently reinvigorate demand.”
Realtor.com Economist Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage continued its downward trend to 7.03 percent this week, down from 7.22 percent last week. While Fed Chair Powell stated last Friday that it was too early to conclude that the current monetary policy is restrictive enough to tame inflation down to the 2% target, the cooling October job openings data, a measure of labor demand, released on Tuesday, boosted investors’ confidence that the Federal Reserve was probably done with rate hikes. As a result, the 10-year treasury yield dropped to its lowest level in three months. Looking ahead, we predict that sustained improvement in inflation will bring the mortgage rate down to 6.5% by the end of 2024. Nonetheless, as mortgage rates stay elevated, ongoing high housing costs indicate that the cooling trend in the nationwide housing market is likely to persist.
While the national forecasted trends are instructive, the critical focus lies in understanding the expectations within local markets. Realtor.com’s Top Housing Markets for 2024 identified 10 housing markets that are expected to grow the most when combining expected sales and price growth. Notably, the top-performing markets in the Northeast and Midwest are distinguished by their affordability, high quality of life, and anticipated strong job markets. In addition, the relatively affordable home prices in these areas may offer a degree of protection against the impact of elevated mortgage rates. The remaining five markets are located in Southern California, which experienced significant declines in sales in 2023 but are projected to rebound with declining interest rates throughout the year. In an alternative high-rate scenario where inflation persists and mortgage rates take longer to decline, or even increase again, these expensive markets could witness a plateau or slight decline in home sales. This potential shift reflects the reassessment of plans by buyers in these pricier and interest-rate-sensitive markets.”