In a positive turn of events for prospective homeowners, US mortgage rates have experienced a notable decline for the third consecutive week, reaching the lowest point since the end of May. According to a statement released by Freddie Mac on Thursday, the average rate for a 30-year fixed loan has decreased from 6.69% to 6.67%.
The gradual easing of mortgage rates has stimulated an uptick in demand within the housing market, especially for new home sales. However, despite this surge in interest, the overall pace of the market remains sluggish due to a scarcity of available homes. Redfin Corp and NAR data reveal that inventory levels in May hit their lowest point since 2012, making it increasingly challenging for potential buyers to find suitable properties.
Although sales of pre-owned homes experienced a marginal increase compared to April, they continue to lag behind last year’s figures. Freddie Mac’s Chief Economist, Sam Khater, attributes this trend to cautious homebuyers who have been closely monitoring the fluctuations in mortgage rates, opting to wait on the sidelines until a more opportune moment. Khater adds, “However, inventory challenges persist as the number of existing homes for sale remains very low.”
The shortage of available listings has resulted in a growing number of buyers considering new homes instead. Consequently, housing starts experienced a significant surge in May, marking the most substantial increase since 2016.