Mortgage rates cooled last week after a weeks-long run of increases.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.18%, down from 7.23%. A year ago at this time, the 30-year FRM averaged 5.66%.
The 15-year fixed-rate mortgage remained the same at 6.55%. A year ago, it averaged 4.98%.
“Mortgage rates leveled off this week but remain elevated. Despite continued high rates, low inventory is keeping house prices steady,” said Sam Khater, Freddie Mac’s Chief Economist.
Active inventory shrank YOY in August. But Realtor.com reported an “unusual increase” in newly listed homes month-over-month, which might suggest homeowners are adjusting to the high-rate environment and preparing to sell come fall.
Any significant change in stock will be slow coming, however.
“While the uptick in new listings is good news for home shoppers, inventory remains persistently low, even with record-high mortgage rates putting a damper on demand,” said Danielle Hale, Chief Economist for Realtor.com.
Hale also expects rates to gradually moderate by year-end, a boon for both buyers and locked-in sellers. But it’s still unclear how quickly they might fall.
The next Federal Open Market Committee meeting is slated for September 19-20. Analysts expect one more quarter-point rate hike in the battle against inflation.
“Recent volatility makes it difficult to forecast where rates will go next, but we should have a better gauge in September as the Federal Reserve determines their next steps regarding interest rate hikes,” Khater said.
The PCE, the Fed’s preferred inflation measure, posted gains this week, though the increase was the smallest since 2020.
Bloomberg economists expect spending to dwindle in coming months, citing summer fun like blockbuster movies and concert tours– plus a rally in equity markets– as the primary causes for the increase.
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