Mortgage rates ticked down from 6.79% last week to 6.78% for a 30-year fixed home loan for the week ending Nov. 14, according to Freddie Mac.
“After a six-week climb, rates have leveled off, but overall affordability continues to be an issue for potential homebuyers,” said Sam Khater, Freddie Mac’s chief economist.
The downturn can be traced to the presidential election, which dominated headlines last week and sent the stock market into overdrive.
“The coming months could bring more mortgage rate volatility as reactions to the election and its implications move through the market,” says Hannah Jones, Realtor.com® senior economic research analyst.
As Americans brace themselves for what could be a wild economic ride as 2024 winds down, here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers.
Mortgage rates expected to climb higher
Once the elections were in the rearview mirror, all economic eyes turned to the Federal Reserve’s Open Market Committee, which met last Thursday.
The Fed cut the Federal Funds rate (the interest rate banks charge each other for short-term loans) by 25 basis points, to 4.5% from 4.75%.
While the Fed doesn’t set mortgage rates, Fed rates and mortgage rates tend to move in the same direction, which helps explain why mortgage rates sank this week. However, “the Freddie Mac rate for a 30-year mortgage continued to remain higher than many initially expected,” explains Realtor.com economist Jiayi Xu.
This “recent upward trajectory of mortgage rates could largely discourage sellers from listing their homes,” says Jones—especially given that roughly 84% of outstanding mortgages have a rate of 6% or lower.
And mortgage rates are expected to go even higher “as a result of postelection Treasury yields,” adds Jones.
Even so, the Realtor.com economic team continues to hold out hope that the largely frozen real estate market might begin to thaw.
“Despite still-high rates, a recent read on homebuyer and seller sentiment showed relatively rosy expectations,” says Jones.
About 64% of sellers consider now a good time to sell, and just 22% of respondents expect mortgage rates to climb.
“Only time will tell whether the market will reflect this optimism,” says Jones.
Median home prices fall slightly
Mortgage rates continue to seesaw while home prices remain flat, falling just 0.2% for the week ending Nov. 9 compared with the same week last year. (Listing prices hit a median of $424,950 nationwide in October.)
This is the 24th week in a row that the median list price was less than or equal to the same week of 2023.
However, when a change in the inventory mix toward smaller homes is accounted for, the median listing price per square foot increased by 1.7% the week ending Nov. 9 compared with the same week a year prior.
“The housing market has remained largely unaffordable to many would-be buyers over the last year,” says Jones.
Despite this, buyers have a glimmer of hope, with “nearly 20% of listings offering price cuts,” according to Xu.
Housing stock continues to rise
Fresh listings are always a boon for buyers, yet they rose by only 1.7% for the week ending Nov. 9 compared with a year ago.
Overall housing stock is also up, with 26.1% more homes for sale for the week ending Nov. 9 than the previous year. This marks 53 weeks with a higher number of homes listed for sale compared with the year before.
Even so, this week’s uptick in housing stock was lower than last week’s, marking the seventh week of slowing momentum and the lowest annual change since late March.
“Slowing listing activity and stifled buyer demand has resulted in slowing inventory growth,” explains Jones.
Nevertheless, if mortgage rates decrease, it could boost buyer demand, which could eat into the recent buildup of housing stock.
Homebuyers are slow to act
Buyers might have taken a break from their house hunt last week to focus on the election—and the economic fallout—as homes spent nine more days on the market for the week ending Nov. 9 year over year. (In October, homes spent a median of 58 days on the market.)
“Generally, buyers have been holding off, waiting for more affordable housing conditions,” says Jones.
The recent bounce-back in mortgage rates that had been edging closer to 6% might be disappointing for homebuyers hoping for a year-end dip.
However, they can benefit from other buyer-friendly market trends, such as “the highest inventory since December 2019 and the slowest seasonal market in five years,” says Xu.
Read more at Realtor.com
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