Mortgage rates still falling — just not as quickly
Following last week’s substantial drop, rates leveled off but still declined modestly, while pending home sales were flat.
Key points:
- The 30-year fixed rate mortgage averaged 6.61%, down from 6.67%.
- Pending home sales were up in three regions, but on a national level did not increase (or drop) in November.
- Economists continue to express optimism about the housing market in 2024.
After speeding toward 6% territory, mortgage rates leveled off a bit at the close of 2023.
The 30-year fixed-rate mortgage averaged 6.61% this week, according to Freddie Mac's latest survey. That's down from 6.67%, and while the drop was not as dramatic this week, it represents the ninth consecutive week of declines.
It's also the lowest rate since May.
"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.
The 15-year fixed-rate mortgage also fell slightly to 5.93%, down from last week's 5.95%.
Mortgage News Daily reported a slight uptick in rates on Dec. 28, suggested that another big drop isn't likely as the year wraps up. While the weekly decline was relatively small, the trend over the past several weeks appears to bolster economist predictions for a happier new year for the housing market.
Pending home sales flat, but optimism abounds
Pending home sales held steady as well, the National Association of Realtors reported. The Northeast, Midwest and West saw an increase in pending transactions, while sales fell in the South, resulting in an overall increase of 0% nationwide in November.
Though pending home sales in all regions were down year-over-year, NAR Chief Economist Lawrence Yun found reason for optimism.
"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," Yun said.
Yun expects home sales to improve in 2024, and Khater is similarly bullish, even though home prices show few signs of decreasing.
"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," Khater said.