US Mortgage rates have decreased for the second consecutive week, providing some much-needed relief to prospective homebuyers. The average rate for a 30-year fixed loan has dropped to 6.77%, marking the lowest point since mid-March and a decline from 6.89% last week, according to a statement released by Freddie Mac on Thursday. This reduction in borrowing costs is contributing to a decrease in the typical monthly housing payment. According to data from Redfin Corp., these payments had previously reached record levels.
Increased Supply Benefits Buyers
In addition to falling mortgage rates, buyers are also benefiting from an increase in housing supply. Total listings are now near the highest level in almost four years, as reported by Redfin. The increase in inventory is expected to gradually exert downward pressure on home price growth, creating a more favorable market for buyers.
“We anticipate that the increasing inventory will gradually exert downward pressure on price growth,” said Jiayi Xu, an economist. “Declining mortgage rates will help lower borrowing costs, providing more relief to potential homebuyers,” she added.
Federal Reserve’s Potential Rate Cuts
The recent easing of inflation has bolstered the outlook for a potential rate cut by the Federal Reserve. The benchmark rate may be cut as early as September.
Fed Chair Jerome Powell noted earlier this week that recent data is giving policymakers more confidence that inflation is moving towards the central bank’s target. These potential rate cuts by the Fed could further reduce mortgage rates. This action might help resolve the market stalemate that has persisted in recent years.

New US Home Construction Rises in June Amid Multifamily Surges
New US home construction increased in June, although a decline in single-family housing starts to an eight-month low underscored challenges in the real estate market due to high interest rates.
Market Stalemate and Buyer Hesitancy
Despite the positive trends in borrowing costs and supply, the market has yet to see a significant response from homebuyers. Buyers have been hesitant to take on high borrowing costs, while potential sellers have been reluctant to part with their pandemic-era low-interest loans.
“Homebuyers have yet to respond to lower rates,” said Sam Khater, Freddie Mac’s chief economist. He pointed out that applications for home-purchase loans are about 5% below their levels in the spring, when mortgage rates were similar. “This is not uncommon,” he added. “Sometimes as rates decline, demand weakens, driven by buyers waiting to see if rates will drop further before making a purchase.”
Outlook for Homebuyers
As the economy remains resilient, the market may eventually see increased activity from homebuyers. Additionally, borrowing costs continue to head in a favorable direction, further encouraging potential buyers to enter the market. The combination of lower mortgage rates and increased housing supply creates a more advantageous environment for those looking to purchase homes. This situation benefits potential homebuyers by offering better financing options and a wider selection of available properties. If the Federal Reserve proceeds with anticipated rate cuts, this could provide further impetus for homebuyers to enter the market. This action could potentially ease the current stalemate and drive a resurgence in home sales.
In summary, the decline in US mortgage rates for the second straight week is a promising development for prospective homebuyers. With rates at their lowest since mid-March and an increase in housing supply, the market conditions are improving. However, buyers continue to wait for potential further rate reductions, and the full impact on buyer activity remains uncertain.
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