After skyrocketing over the last few years, the housing market could soon see some relief, with 30-year fixed mortgage rates falling under 7% this week.
According to the federal home loan mortgage corporation Freddie Mac, rates have dropped to 6.99%, and some are looking at the improvement as a sign more economic pressures could be easing.
But while rates may be easing from their housing market explosion, experts say that the market is still dry of inventory because many don’t want to give up their interest rates of 3% or 4%, CBS’s Jill Schlesinger shared with Audacy.
“Right now, about 58% of every outstanding mortgage holder has a rate that’s under 4%,” Schlesinger said. “Okay, this is what is called a lock-in effect.”
With many staying for their rates instead of their homes, buyers are being faced with a shortage of inventory, meaning no one in the market is moving.
As for the homes that are being listed, Schlesinger says that there are always core reasons that someone would put their house up for sale.
“Death, divorce, disease. It’s why people will tend to list their homes regardless of what’s going on in the marketplace,” Schlesinger said. “You can have a hot or a rotten housing market, but if someone passes away, then you have to list that home. Or if you’re getting a divorce, we list the home, and sometimes people say, ‘You know, if there’s an illness, I can’t stay in this home anymore.’”
With the easing mortgage rates, some are looking to the Federal Reserve to see if they might cut interest rates within the coming months. But, Fed chair Jerome Powell has made it clear that until inflation eases for an extended period, the rate cuts aren’t coming.
Current estimations put rate cuts at some time this fall, being that inflation continues to trend downwards.
As for what buyers could do, Freddie Mac says that shopping for the best rate remains the best option.
“Rates are just shy of seven percent, and we expect them to modestly decline over the remainder of 2024,” Freddi Mac shared. “If a potential buyer is looking to buy a home this year, waiting for lower rates may result in small savings, but shopping around for the best rate remains tremendously beneficial.”
