Mortgage rates slipped for a fifth consecutive week, spurring a boost in purchase activity.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.22%, down from the week prior’s 7.29%. A year ago at this time, the 30-year FRM averaged 6.49%.
The 15-year fixed rate fell to 6.56%% from 6.67%. A year ago, it averaged 5.76%.
“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates. The current trajectory of rates is an encouraging development for potential homebuyers, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels,” said Sam Khater, Freddie Mac’s Chief Economist.
Purchase applications increased by 5% last week as buyers jumped to secure sub-8% rates.
“The modest uptick in demand over the last month signals that there will likely be more competition in a market that remains starved for inventory,” Kan added.
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.
Pending sales fell to their lowest level in two decades in October, but the data showed that relatively affordable markets with more inventory fared best. The Northeast actually saw pending sales rise month-over-month.
Inventory is expected to rise in 2024 as builders churn out new construction and life changes force locked-in homeowners to sell.
“Moves of necessity – for job changes, family situation changes, and downsizing to a more affordable market – are likely to drive home sales in 2024,” Danielle Hale, chief economist for Realtor.com said.
Relocations for work are already impacting the market, with Redfin reporting earlier this year that one in ten sellers listed their homes because of return-to-office mandates.
“I’ve had a lot of sellers reach out to me recently saying they’re ready to list their homes—a reversal from recent months,” Heather Mahmood-Corley, a real estate agent in Phoenix, said of the trend. “Everyone has a different reason for relocating.”
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