Mortgage rates have fallen to their lowest level in over a year, with the average rate for a 30-year fixed home loan dropping to 6.35% from 6.46% last week. This decline is expected to bring some much-needed energy to the housing market, which has been sluggish throughout the summer.
The Federal Reserve's upcoming policy meeting in September is highly anticipated, with many expecting a rate cut for the first time in over a year. Although the Fed does not directly set mortgage rates, its decisions often influence them. According to Freddie Mac's chief economist, Sam Khater, rates are expected to continue their decline, but a significant drop is unlikely unless economic indicators worsen.
Median home prices have seen a slight decline, down 0.2% for the week ending August 24 compared to the same period last year. This marks the 13th consecutive week where the median list price in the U.S. was less than or equal to what it was a year ago. Buyers have benefited from sellers reducing list prices to meet market demands.
The total number of houses for sale has increased by 33.6% for the week ending August 24 compared to last year. This marks a 42-week growth streak, translating into the largest number of active listings since May 2020. However, fresh listings have only ticked up by 2.2% year over year.
Homes are spending more time on the market, giving buyers more breathing room. For the week ending August 24, homes spent eight more days on the market than the same time last year. This slowdown is the most significant annual increase in time on the market since July 2023. Sellers are likely to continue adjusting prices to see movement in their listings, which is good news for buyers.
The recent drop in mortgage rates to 6.35% has brought a glimmer of hope to the housing market. While the decline is a positive sign, the market is still grappling with high home prices and a slow pace. Buyers and sellers alike are watching closely, hoping for further declines and a more balanced market.