Mortgage rates slipped for a third consecutive week as Wall Street rallied around positive inflation data.
Officials at Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 7.44%, a modest decline from the week prior’s 7.5%. A year ago at this time, the 30-year FRM averaged 6.61%.
The 15-year fixed rate fell from 6.81%% to 6.76%. A year ago, it averaged 5.98%.
“For the third straight week, mortgage rates trended down, as new data indicates that inflationary pressures are receding,” said Sam Khater, Freddie Mac’s Chief Economist. “The combination of continued economic strength, lower inflation, and lower mortgage rates should likely bring more potential homebuyers into the market.”
The consumer price index for October dipped by 0.1% month-over-month and up 3.2% from a year ago. Both numbers beat Wall Street estimates and markets spiked, with treasury yields falling significantly.
“The Fed looks smart for effectively ending its tightening cycle as inflation continues to slow. Yields are down significantly as the last of investors not convinced the Fed is done are likely throwing in the towel,” Bryce Doty, portfolio manager at Sit Fixed Income Advisors, told CNBC.
NAR chief economist Lawrence Yun predicts that these positive data will lead to improved buying conditions in 2024.
“The interest rate rises should be over, and the Fed will have to consider cutting interest rates seriously,” Yun said. “In the meantime, the bond market is reacting as if the Fed will be cutting interest rates next year. Mortgage rates look to head towards 7% in a few months and into the 6% range by the spring of 2024.”
These conditions should result in a 5% increase for single-family starts in 2024, according to the National Association of Home Builders.
“While builder sentiment was down again in November, recent macroeconomic data point to improving conditions for home construction in the coming months,” said NAHB Chief Economist Robert Dietz.
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