Mortgage rates are now lower than a year ago, but house hunters remain cautious.
Mortgage rates have been holding mostly steady this month, after dropping nearly a half percent from their peak earlier this year, Freddie Mac reports. “Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data,” says Sam Khater, Freddie Mac’s chief economist.
The National Association of REALTORS® reported this week that existing-home sales in June fell 5.4% compared to a year earlier. New-home sales also fell, down 7.4% compared to a year ago and the lowest pace since November 2023.
“Many potential buyers are remaining in a holding pattern due to elevated mortgage rates that averaged near 7% in June,” says Carl Harris, chairman of the National Association of Home Builders. “However, moderating inflation suggests lower interest rates in the months ahead and that should bring more buyers off the sidelines.”
That could help home buyers handle the higher home prices, with existing-home prices surging to an all-time high in June, reading a median of $426,900. At this week’s average 30-year fixed mortgage rate of 6.78%, with a 20% down payment, a household would face a monthly mortgage payment on a median-priced existing home of $2,222, says Jessica Lautz, NAR’s deputy chief economist. Housing affordability and still-high inflation remain pressing issues holding many would-be home buyers back.
Indeed, real estate agents in the Mid-Atlantic region report that affordability was the main reason their clients paused their home search over the past six months, with about half citing high prices, not enough homes in their price range, or high mortgage rates.
“With mortgage rates hovering around 7% and home prices continuing to rise, financing is a growing challenge for buyers, and this is beginning to impact a buyer’s ability to make it across the finish line,” says Lisa Sturtevant, Bright MLS’s chief economist. Bright MLS data shows that a rising percentage of sellers—14%, as of June—had a contract fall through due to the buyer’s inability to secure financing.
Mortgage Rates this Week
Freddie Mac reports the following national averages with mortgage rates for the week ending July 25:
- 30-year fixed-rate mortgages: averaged 6.78%, slightly higher than last week’s 6.77% average. A year ago, 30-year rates averaged 6.81%.
- 15-year fixed-rate mortgages: averaged 6.07%, rising slightly from last week’s 6.05% average. A year ago, 15-year rates averaged 6.11%.
Source: nar.realtor
