After falling sharply in the first two weeks of August, mortgage rates have stabilized ahead of the release of key economic data on Friday.
just then Fed Chairman Powell will speak at the annual economic symposium in Jackson Hole, Wyoming. Powell is expected to provide an update on U.S. monetary policy to central bankers, economists and other financial market experts attending the meeting.
“Powell is widely expected to lay the groundwork for the first federal funds rate cut in September,” house line chief analyst Logan Mohtashami wrote on Saturday. “We have to remember that even though the Fed has cut interest rates three times, they are still going to have restrictive policies.”
HousingWire Mortgage Rate Center’s 30-year conforming loan rate averaged 6.69% on Tuesday, up 1 basis point (bps) from a week ago and 5 bps higher than Friday when rates hit their lowest point of the year. The 15-year conforming loan rate surged to 6.25%, up 16 basis points since bottoming out on Friday.
Last month, the Fed chose to keep its benchmark interest rate steady in a range of 5.25% to 5.5%. The federal funds rate has been unchanged since July 2023, the last in a series of rate hikes aimed at curbing four decades of high inflation.
Recent data shows that inflation has subsided and is approaching the Fed’s 2% annual growth target. The consumer price index increased by 2.9% year-on-year in July, the lowest increase since March 2021. That has raised fears of a recession among market observers, who believe the Fed could keep interest rates too high for too long.
The recent decline in mortgage rates has spurred optimism across the real estate and mortgage industry after tepid home sales in the spring and summer. Earlier this month, some loan officers reported that government loans were priced around 5% to 6%, while conventional loans were priced around 6%.
But even after Fannie Mae Refinancing applications are at a two-year high, but interest rates are still too high to fuel a refinancing boom, the report said. About 88% of Fannie Mae’s single-family mortgages have interest rates below 6%, and about 81% have interest rates below 5%. Lenders across the country report that refinancing activity has not yet seen meaningful growth as many borrowers maintain a “wait and see” stance.
Likewise, lower interest rates have yet to provide a material boost to the buying market. Data comes from altos research corp. Inventories for sale showed growth of less than 1% over the past week, the slowest growth rate in months and a pullback expected given the typical summer sales window is coming to an end.
“As mortgage rates fall, we will see if buyer demand picks up significantly,” Mike Simonsen, president of Altos Research, wrote on Monday. “Of course, payments are still very expensive, but they are currently at their lowest point in a year. Are there incentives? Buyer threshold? I previously thought 6.5% would be a clear threshold for increased homebuyer demand, but I haven’t seen any confirmation.
redfin tuna A similar trend was observed in a report released on Tuesday. The brokerage found that U.S. home prices increased by 6.8% annually in July, which was the slowest appreciation rate since January 2024. decline.
“There are not enough sellers listing their homes to drive prices down, and there are not enough buyers to create competition that drives prices up significantly,” Redfin senior economist Sheharyar Bokhari said in the report. “Relatively low sales volume And the gradually rising prices will continue to be what they are every month until one of those things changes.”
In California, the sales rate for existing single-family homes increased on both a monthly and annual basis in July but remained well below pre-pandemic levels. this California Association of Realtors (CAR) reported Tuesday that the state’s median home price in July was $886,560, down 1.6% from June, but higher transaction levels were driven by homes priced over $1 million. Sales of homes priced under $500,000 were down slightly compared to July 2023.
“Mortgage rates have continued to fall over the past few months, reaching their lowest level in 15 months as the economy showed more signs of cooling,” Jordan Levine, senior vice president and chief economist at CAR, said in a statement. levels. “Improvements in lower borrowing costs may encourage buyers on the sidelines to re-enter the market, especially as home prices begin to soften towards the end of the home-buying season. “
