Mortgage rates are continuing to fall, but remain significantly higher than last year.
The average 30-year mortgage rate is now below 5% for the first time in four months. However, at 4.99%, it’s still higher than this time last year when it was 2.77%, the Associated Press reports.
In late July, the Federal Reserve raised rates again in an effort to stop record high inflation.
Even with high mortgage rates, the home market hasn’t seen a drastic drop. Now with falling rates, any slowdown in the housing market is likely to be reversed.
“Higher mortgage rates and heightened economic uncertainty cooled borrower demand in June, leading to new-home purchase applications declining to the lowest level since April 2020,” says Mortgage Bankers Association economist Joel Kan.
Existing home sales have dropped, according to the National Association of Realtors. Total existing home sales fell 5.4% from May to June. Since June 2021, sales have gone down 14.2%.
Lower rates may increase the number of people eligible to buy a home, but finding affordable housing will still be a challenge. House payments are 50% higher than they were last year, reports Fortune.
Even though the number of home sales has fallen, the price of a home remains high due to a lack of inventory.
“We still do not have enough inventory for demand—40% less. Still in favor of the seller but not totally nuts,” says JPAR Real Estate CEO Mark Johnson.
Developers broke ground on 982,000 single-family homes in June, a 19% decrease since February 2022 and 16% decrease since June 2021, Forbes reports.
