Mortgage rates continued their descent this week in a trend accompanied by an uptick in home-purchase demand, but elevated home prices remain a barrier to many would-be buyers.
Freddie Mac's latest Primary Mortgage Market Survey released Thursday showed that the average rate for the benchmark 30-year fixed-rate mortgage fell to 7.03% this week, down from 7.22% last week but up from 6.33% a year ago.
The rate for a 15-year fixed mortgage also declined, averaging 6.29% after coming in last week at 6.56%. One year ago, the rate on a 15-year fixed note averaged 5.67%.
THESE HOUSING MARKETS ARE EXPECTED TO SEE DOUBLE DIGIT SALES GROWTH IN 2024
Although mortgage applications have risen for five straight weeks, high mortgage rates have dampened consumer demand over the past year and severely limited inventory. That is because sellers who locked in a low mortgage rate before the pandemic have been reluctant to sell with rates continuing to hover near a two-decade high, leaving few options for eager would-be buyers.
As low inventory persists, home prices remain high, rising for the eighth straight month in September according to the latest S&P CoreLogic Case-Shiller index released last week.
PENDING HOME SALES FALL TO RECORD LOW AS HIGH MORTGAGE RATES TAKE A TOLL
Data from Redfin shows U.S. home prices were up 3.4% year-over-year in October, while the number of homes for sale fell 9.98%. According to the realty group, the median home price in October was $413,504.
Many economists expect rates to continue to decline, but do not anticipate a quick remedy to the home affordability crisis.
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"Looking ahead, we predict that sustained improvement in inflation will bring the mortgage rate down to 6.5% by the end of 2024," Realtor.com economist Jiayi Xu said in a statement. "Nonetheless, as mortgage rates stay elevated, ongoing high housing costs indicate that the cooling trend in the nationwide housing market is likely to persist."
FOX Business' Megan Henney contributed to this report.
