Mortgage interest rates dipped modestly again last week, the fifth consecutive week of decline, Freddie Mac reported Thursday.
Freddie’s Primary Mortgage Market Survey found that the 30-year fixed-rate mortgage averaged 6.31%, down from 6.33% the week prior.
A year ago at this time, the 30-year FRM averaged 3.12 percent.
The 15-year fixed-rate mortgage fell from 5.67% to 5.54%. A year ago, it averaged 2.34%.
“Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s Chief Economist.
“The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand. The bad news is that demand remains very weak in the face of affordability hurdles that are still quite high.”
Both mortgage purchase applications and purchase demand are up by double digits from lows in October.
But both are still way down compared to last December, and sales are at their slowest pace in nearly two years.
“Slowing inflation and the hope of the Fed easing rate hikes in the new year are likely to bring mortgage rates down further and thereby improve homebuying demand,” said Redfin Deputy Chief Economist Taylor Marr.
“But don’t call it a comeback or even a recovery yet; demand is still way down from its peak.”
Affordability remains a challenge even as the market sinks. The monthly mortgage payment on a typical U.S. home dropped by $100 in November but was still up $720 YOY.
Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors, said that if rates stabilize near 6% by year-end, buying a home will become more affordable for many Americans.
“While the typical family cannot currently afford to buy a median-priced home as the qualifying income exceeds earned income, housing will become affordable again for Americans if rates hover near 6%,” she wrote.
“In this scenario, the typical family will earn about $1,000 more than the income needed to purchase a mid-priced home. With more buyers back in the market, the housing market may turn around at the beginning of the new year.”