Mortgage rates this week dropped to the lowest level since May, continuing a pullback from nearly 8% in October. A housing market turnaround is coming, experts say.
The average 30-year fixed mortgage rate was 6.61% this week,
Freddie Mac
said Thursday. It was the lowest level gauged by the weekly reading since May 25.
“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,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Mortgage rates have fallen by more than a percentage point since peaking in October. Buyers may be waiting in the wings—but housing market data has yet to capture signs of significantly more sales. A measure of contract signings for existing home purchases was flat in November with October’s level.
Economists had expected that the National Association of Realtors’ pending home sales index would gain slightly. Instead, November’s level marked the second month of record low contract signings. Pending sales precede closed deals by a month or two, making the index a forward-looking indicator of future home sales.
But a turnaround may be near. “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,” Lawrence Yun, the trade group’s chief economist, said in a statement.
Despite the plateau, sales increased in three of the nation’s four broad regions—with the greatest pickup in the West, where sales rose 4.2% from the month prior. Northeastern and Midwestern sales followed, with gains of 0.8% and 0.5%, respectively. Sales in the south fell 2.3% from the month prior.
Write to Shaina Mishkin at [email protected]
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