The 30-year fixed rate mortgage fell nearly 20 bps in one week, almost hitting 7%.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.03%, down from the week prior’s 7.22%. A year ago at this time, the 30-year FRM averaged 6.33%.
It is now down nearly 80 bps in the last six weeks.
The 15-year fixed rate fell to 6.29%% from 6.56%. A year ago, it averaged 5.67%.
Mortgage applications overall increased by nearly 3% last week as refinances saw their biggest gains in two months thanks to cooling rates.
But purchase demand reversed course, slipping slightly.
“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,” said Sam Khater, Freddie Mac’s Chief Economist.
Lower rates are a win for homebuyers struggling to find affordable listings as home prices remain elevated.
But rates alone can’t reinvigorate housing activity. Stock shortages are keeping competition hot for well-priced homes, and analysts agree that the nation needs more houses to reign in unaffordability.
Homebuilders have been churning out new construction in response to high demand, but increasing financial pressures have led to fewer single-family builds.
“Rising mortgage rates, elevated construction costs, and chronic construction labor shortages have led to negative quarterly growth rates in single-family home building for all geographic markets since the beginning of 2023,” Alicia Huey, chairman of the National Association of Home Builders, noted.
Adding urgency to new construction is the livability of old homes. The median age of an American home was 43 years in 2021. Old homes can pose health risks as well as force homeowners to pay huge repair costs just to stay safe.
A Federal Reserve Bank of Philadelphia study found it would cost $126.9 billion to repair every “sick” home in the country.
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