For prospective homeowners, 2024 may hold some promise as well as challenges. The year has begun with a continuation of a downward trend in mortgage rates from their October highs.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.61% as of December 28, 2023, down from the previous week when it averaged 6.67%.
The 15-year fixed-rate mortgage averaged 5.93%, down from last week when it averaged 5.95%. A year ago at this time, the 15-year rate averaged 5.68%.
“The rapid descent of mortgage rates over the last two months stabilized a bit this week, but rates continue to trend down,” said Sam Khater, Freddie Mac’s chief economist. “Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market.”
But falling mortgage rates by themselves might not be enough to improve housing affordability. Also last week, the National Association of Realtors (NAR) reported that pending home sales in November were much the same as in October, when they recorded a large drop.
Lookers, but not buyers
"Although declining mortgage rates did not induce more homebuyers to submit formal contracts in November, it has sparked a surge in interest, as evidenced by a higher number of lockbox openings," said Lawrence Yun, NAR chief economist.
A possible reason few of those looking at homes signed contracts in November is that home prices remain high and continue to move higher. The median existing-home sales price rose 4% from November 2022 to $387,600 – the fifth consecutive month of year-over-year price increases.
There were also fewer homes to buy. NAR reports the inventory of unsold existing homes slid 1.7% from the previous month to 1.13 million at the end of November, or the equivalent of 3.5 months' supply at the current monthly sales pace.
While mortgage rates are getting lower, home prices continue to move higher, resulting in more expensive monthly house payments.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-01-02 11:50:16
