‘Unexpected Windfall’: Mortgage Rates Fall Below 7% for the First Time in Over a Month

‘Unexpected Windfall’: Mortgage Rates Fall Below 7% for the First Time in Over a Month

  • Isabel Rawson
  • 05/24/24

Mortgage rates dipped below 7% this week, with the average rate for a 30-year fixed home loan dropping from 7.02% last week to 6.94% for the week ending May 23, according to Freddie Mac.

“Spring homebuyers received an unexpected windfall this week, as mortgage rates fell below the seven percent threshold for the first time in over a month,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

Mortgage rates have been above 7% for five weeks, so the falling rate might give the waning spring housing market a boost.

In addition to lower rates, buyers can also reap the benefits of 28 straight weeks of rising housing stock for the week ending May 18.

“This past week, the inventory of homes for sale grew by 35.5% compared with last year,” says Realtor.com® data scientist Sabrina Speianu in her latest analysis. “It was the highest since July 2020 in the early days of the [COVID-19] pandemic.”

Here’s a breakdown of the latest housing market data and what it means for homebuyers and sellers in our most recent installment of “How’s the Housing Market This Week?

The mortgage rate outlook

“Rates dropped following the release of April’s consumer price index data, which indicated a slowdown in inflation after acceleration since January 2024,” says Speianu. “Recent readings on the labor market and inflation data point to conditions heading in the right direction going forward, but the path to lower interest rates may continue to have a few unexpected bumps along the way.”

Overall, though, rates might be headed in the right direction: down.

“The progress in inflation and labor market observed in April data will likely provide some stability in mortgage rates and may even lead to some additional declines,” said Realtor.com economist Jiayi Xu in a statement. “As mortgage rates have stopped climbing, buyers and sellers are eagerly anticipating lower mortgage rates to reignite the housing market.”

More homes are heading to market

In addition to the total number of homes for sale being at four-year highs, new-to-market listings also shot up by 8.1% from the year prior.

“Seller activity continued to climb annually last week and accelerated relative to the previous week’s growth,” says Speianu.

Last week, new listings increased by 6.6% compared with the previous year. The current week-over-week growth is a sign that sellers might be finally willing to put their properties on the market.

“Earlier in May, we saw sellers—many of whom are themselves buyers—cautiously pull back from listing their homes as mortgage rates increased and growth in new listings decelerated,” says Speianu. “However, mortgage rates have once again continued to soften this past week after several weeks of growth. In response to rates resuming their decline, more home sellers opted to list their homes for sale as growth in new listings picked up the pace once again.”

Buyers looking for the most homes to choose from should head South: This balmy region saw a 43.0% year-over-year increase in inventory in April.

“Markets in the South are also a primary driver of inventory affordability, with more small and affordable homes primarily being listed in this region,” adds Speianu.

Home prices tick up

The nation’s median list price edged up for the week ending May 18 by 0.6% year over year. (The median-priced home cost $430,000 in April.)

The slight uptick comes after 11 weeks of no or negative annual price growth.

“In recent months, listing price growth has remained muted as a greater share of more affordable homes were available for sale compared to the same time last year,” says Speianu.

The pace of home sales slows

Homes spent an extra day on the market for the week ending May 18 compared with the same week last year. (The typical home spent 47 days on the market in April.)

“Recent increases in mortgage rates have resulted in both buyers and sellers acting more cautiously, with homes churning at rates similar to last year for the past three months,” says Speianu.

Buyers should note that, though home sales are slowing down, the pace is still quicker than in pre-pandemic times, as inventory has yet to return to “normal levels,” as Speianu puts it.

“Home inventory, despite gains compared to last year, still remains below pre-pandemic levels and continues to provide a floor to listing prices,” she adds.




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