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Lower mortgage rates haven’t materialized yet 

30-year mortgage rates have remained in the upper-6% range since December. Will predicted rate drops arrive in time for the spring buying season?

February 8, 2024
2 minutes

Key points:

  • The 30-year fixed-rate mortgage was 6.64% in Freddie Mac’s weekly survey, nearly flat compared to the previous week.
  • The rate has remained around 6.6% so far this year as the economy remains strong and the Fed doesn’t appear ready to cut interest rates.
  • Would-be buyers might choose to wait for rates to go down, which could lead to increased inventory in early spring.

Mortgage interest rates haven't moved much this year — and that seems to be keeping buyers away.

The average 30-year fixed-rate mortgage rate was 6.64% this week, according to the latest Freddie Mac survey. That's up just a tick from last week's 6.63% average, and rates have stayed in that 6.6% range since late December.

The 15-year rate averaged 5.9%, down from 5.94% a week ago.

With many expecting rates to steadily fall throughout 2024, it's been a disappointing winter season for homebuying since inventory has also remained low, and prices are still rising.

"Homebuyers may be feeling like the lower mortgage rates they've been promised in 2024 are not materializing," said Lisa Sturtevant, chief economist at Bright MLS.

The surprising strength of the economy is one factor keeping rates from falling. The most recent jobs report continued to show that the economy is charging ahead, and inflation remains above the Federal Reserve's 2% target rate.

During a recent interview on "60 Minutes," Fed Chairman Jerome Powell indicated that he didn't expect a rate cut in March, which means the next chance won't come until May — well into the spring homebuying season.    

So it remains a waiting game for many buyers. Mortgage application activity for home purchases remains weaker than a year ago, said Joel Kan, deputy chief economist for the Mortgage Bankers Association

Buyers on the sidelines for now

Even for those homebuyers who are willing to take on elevated mortgage rates, inventory remains a problem. Redfin's weekly market report notes that while new listings are rising (up 6.6% compared to a year ago), active listings are still down 3.5% year-over-year. That has led to the biggest decline in pending sales in four months, according to the report.

"We're seeing a bit of recovery with house hunters touring homes, but even demand at the earliest stages isn't up as much as we would expect at this time of year," said Chen Zhao, Redfin's economic research lead.

What will happen if mortgage interest rates remain around 6.6% when spring arrives? 

Some buyers may choose to hold off, waiting for rates to fall to a more friendly level, said Hannah Jones, senior economic research analyst for One upside of that scenario could be more inventory, leading to a more favorable market for spring buyers.

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