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Mortgage Rates Dip Below 6% Again!
20 Feb
Summary
- Benchmark 30-year fixed mortgage rate drops to 6.01%, lowest since September 2022.
- Home sales remain sluggish despite lower rates and improving affordability.
- New contract signings indicate continued slow sales in the near term.
The benchmark 30-year fixed mortgage rate has retreated to 6.01% from 6.09% reported last week, reaching its lowest level since September 8, 2022. This marks a significant decrease from the 6.85% average seen a year ago, bringing rates below 6% for the first time in over a year.
Despite these favorable rate movements, the U.S. housing market continues to grapple with a slump dating back to 2022. Sales of previously occupied homes were stagnant last year, and despite lower rates this year, demand has not significantly increased. Pending home sales in January saw a monthly drop of 0.8%, indicating that sales may remain subdued in the immediate future.
Experts note that while improving affordability conditions are present, they haven't yet spurred substantial buying activity. A chronic shortage of homes and a sharp run-up in prices have priced many prospective buyers out of the market. However, the recent decline in mortgage rates is seen as a positive indicator for the upcoming spring home-buying season.
Economists predict that these lower rates, if sustained, could improve purchasing power and attract more buyers. Homeowners looking to refinance are also benefiting, with 15-year fixed-rate mortgage rates also inching lower. This trend is occurring as the Federal Reserve has paused interest rate cuts, with officials awaiting further evidence of inflation reduction before considering new rate adjustments.
