Mortgage rates didn't move down by much this week, offering no relief for buyers. (iStock)
Prospective homebuyers didn't get much relief on mortgage rates this week, as the average 30-year fixed-rate mortgages barely budged from 6.87 to 6.86%, Freddie Mac reported.
Last year, interest rates weren’t wildly different and averaged 6.71% for 30-year mortgages and 6.06% for 15-year mortgages.
"The 30-year fixed-rate mortgage continues to trend down, hitting the lowest level in almost three months," Sam Khater, Freddie Mac’s Chief Economist said.
"By historical standards, the economy is in good shape, and we expect rates to continue to come down over the summer months, bringing additional homebuyers back into the market," said Khater.
Interest rates for 15-year mortgages suffered this week, averaging 6.16%. Last week, rates averaged a little lower at 6.13%.
Prospective buyers that want to see what kind of loan term and rates would work for them can take advantage of Credible's free online tools.
Most Americans remain pessimistic about home prices
High home prices have buyers struggling to go through with purchases, and many don’t expect the market to get better anytime soon. Only 21% of Americans think now is the right time to buy a home, a Gallup poll found.
Nearly 68% of adults also expect home prices in their area to go up in the next year, one of the highest readings in polling history. A year ago, only 56% said the same thing, indicating that Americans are very aware of the current state of the market.
A majority of potential buyers are waiting for mortgage rates to drop before selling or buying. Considering the Federal Reserve has decided to keep interest rates where they are, mortgage rates likely won’t drop in the near future.
"Although mortgage rates continue to trend lower, the declines have not yet been big enough to have an impact on most housing metrics," Realtor.com Chief Economist Danielle Hale explained.
The good news is, rates aren’t expected to jump up again, given the current economy and housing market.
"For home shoppers and sellers, peak mortgage rates are likely behind us, but the risk of volatility remains, complicating moving decisions," Realtor.com Economist Jiayi Xu said. "In addition, with only one rate cut expected before the end of 2024, relief may come too little and too late for many first-time homebuyers."
If you think you’re ready to shop around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders in minutes.
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Inventory isn’t the problem, housing affordability is
Summer is a common time for sellers to list their homes, and this summer is no different. Listings are up by 14.9% as of May, Redfin reported. In the month of May alone, there were about 1.75 million homes listed for sale, and 658,024 of those were newly listed.
There are plenty of listings to choose from in many parts of the country, but the price tied to those listings is keeping buyers away.
Affordability is down substantially as incomes struggle to keep up with the cost of housing. The preliminary housing affordability index from the National Association of Realtors (NAR) is down to 95.9. A score of over 100 signals that middle-class households have just enough income to buy an average-priced home in their area.
Unfortunately, economists don’t believe the housing market will rebound until at least 2026, according to a Bank of America release. Economists at the company explained that the housing market is currently "stuck" in a place of unaffordability for many Americans.
The market isn’t likely to become "unstuck" until 2026 or later. Plus, prices are expected to stay high and have the potential to get even more expensive.
Before you ever shop for a home, first, check mortgage rates with an online marketplace like Credible.
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