Mortgage rates declined modestly this week but remain close to 7%, according to the latest data from Freddie Mac. While rate stability offers some relief, soaring home prices are keeping many buyers on the sidelines. Industry experts suggest the market may be nearing a shift as growing inventory meets waning demand.
Mortgage Rates See Minor Decline
Freddie Mac’s Primary Mortgage Market Survey reported Thursday that the average rate on the benchmark 30-year fixed mortgage edged down to 6.84% from last week’s 6.85%. One year ago, the 30-year rate stood at 6.95%. The 15-year fixed mortgage rate also slipped slightly to 5.97% from 5.99% the prior week, compared to 6.17% a year earlier.
Rate Stability Offers Limited Relief
“Mortgage rates have moved within a narrow range for the past few months and this week is no different,” said Sam Khater, Freddie Mac’s chief economist. He noted that current conditions of rate stability, increasing inventory, and slower house price growth are positive signs, particularly as the nation observes National Homeownership Month. However, elevated borrowing costs continue to challenge affordability for many buyers.
Home Prices Hit Record Highs
Despite the slight decline in rates, U.S. home listing prices have reached an all-time high. According to Redfin, the total value of homes in the country jumped 20.3% year-over-year, reaching a record $698 billion. The surge reflects a combination of increased inventory, slowing buyer demand, and escalating home-sale prices.
Buyers Struggle with Affordability
Redfin chief economist Daryl Fairweather told FOX Business that the current pricing environment is discouraging buyers. “All these homes are listed for really high prices, which is why they are sitting on the market. But buyers can’t afford at these high prices, which is why they’re backing off of the market,” Fairweather explained. He cited not only high mortgage rates but also rising insurance costs and property taxes as additional barriers to homeownership.
Market Poised for a Shift
With the number of sellers now outpacing buyers, experts suggest that the market could shift in the coming months. As more homes sit unsold due to affordability challenges, sellers may be forced to adjust pricing expectations. This potential adjustment could open the door for more buyers if borrowing costs stabilize or decline further.
Conclusion
While mortgage rates have shown minor declines, affordability challenges remain significant as home prices continue to rise. With inventory building and buyers pulling back, the housing market may be approaching a transition phase that could reshape pricing dynamics in the months ahead.