Mortgage rates inched up but remained within the mid-6% range, a welcome moment of stability after a rollercoaster year.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 6.69%, up from the week prior’s 6.60%. A year ago at this time, the 30-year FRM averaged 6.13%.
The 15-year fixed also rose to 5.96% from 5.76%. A year ago, it averaged 5.17%.
“The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week,” said Sam Khater, Freddie Mac’s Chief Economist.
“Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace.”
New home sales are up as existing inventory remains constrained, making builders the best bet for Americans taking advantage of cooling rates.
But market activity isn’t expected to make a comeback right away. The “busier” spring season proposed by Khater could be stronger than the slowest homebuying year in three decades but still historically slow. Many analysts think demand will be subdued for the first half of 2024.
They’re betting that improved inflation and ongoing financial strength will convince the Central Bank to cut rates sometime in spring or summer, launching a wave of demand in the last half of the year.
“Stronger economic growth will benefit the housing market [in 2024], keeping demand robust,” MBA’s Joel Kan said in recent commentary.
“For the broader economy, 2023 was a much better year than we had expected, even as the housing and mortgage markets were stuck in the doldrums. While we still anticipate that the economy will slow in 2024, this strong momentum in the fourth quarter makes a precipitous decline less likely. A path for lower rates should help housing markets.”
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