Key US mortgage rate falls to lowest level since March, says Freddie Mac

By Makailah Gause

NEW YORK (Reuters) – The average interest rate on popular 30-year fixed-rate mortgages in the United States fell to its lowest level since mid-March this week, a welcome development for a housing market struggling to find its footing and that can continue. if the Federal Reserve cuts rates as expected in the coming months.

The 30-year fixed-rate mortgage averaged 6.77% during the week ending July 18, the lowest level since mid-March, down from 6.89% the previous week, mortgage lending agency Freddie said. Mac on Thursday.

The average was 6.78% during the same period last year. The data shows that homebuyers are still not responding to the rate reduction, with demand for purchasing apps remaining about 5% below where it was in the spring, Freddie Mac’s chief economist said.

“Sometimes as rates fall, demand weakens and the apparent paradox is driven by buyers making sure rates don’t fall further before deciding to buy,” chief economist Sam Khater said in a statement.

The housing market has been one of the sectors most affected by the Fed’s interest rate hikes since the beginning of 2022. In 2023, the volume of existing home sales reached the lowest level since 1995 and the supply of home sales remained tight .

Many homeowners are reluctant to sell because their existing home loans are still secured at much lower rates, and buying another home would likely mean a higher rate and additional costs. Low inventory continues to keep home prices inflated.

Economists are hopeful that the Fed’s early start to rate cuts – perhaps as early as September – could flow through to support the housing market by lowering financing costs in the coming months.

Signs about the stalling of the market recovery are mixed. Overall housing starts rose 3.0% in June, but that was driven by apartment projects rather than single-family home construction, where starts fell to an eight-month low last month, the Census Bureau said in Wednesday.

Data on existing home sales for June will be released next week by the National Association of Realtors. Existing home sales fell for three straight months through May.

(Reporting by Makailah Gause; Editing by Dan Burns)