Mortgage Rates Fall to 6.09%, Boosting Optimism in the Housing Market
Introduction
Mortgage rates fell to 6.09% for a 30-year fixed loan, down from 6.20%, as of Sept. 19, according to Freddie Mac. This drop has renewed hope for both buyers and sellers in the housing market.
Mortgage Rates Decline
Sam Khater, chief economist at Freddie Mac, stated that the recent rate cut by the Federal Reserve, the first since 2020, is expected to have a positive impact on the housing market. Although mortgage rates do not directly follow the Fed’s moves, the decline in rates over the past few weeks suggests this cut was anticipated. Experts expect rates to continue falling, spurring more buying and refinancing activity.
Optimism Returns to the Market
Realtor.com economist Jiayi Xu believes that the rate cut is injecting optimism into the fall housing market. Realtor.com’s senior economist Ralph McLaughlin predicts that both buyers and sellers will ramp up activity, particularly as the Best Time to Buy—Sept. 29 to Oct. 5—approaches. This period offers favorable market conditions for homebuyers.
Fed’s Rate Cut Spurs Housing Activity
The Federal Reserve’s recent half-point rate cut reduced its benchmark rate from a two-decade high of 5.3% to 4.8%. Mortgage rates are expected to continue falling, with predictions that they could settle between 6% and 6.2% by year-end and possibly dip into the high 5% range by spring.
Home Prices Cool Off
Along with lower mortgage rates, home prices have also been cooling. The national median list price for homes in August was $429,990, and prices fell 1% year-over-year for the week ending Sept. 14. This is the 16th consecutive week where listing prices were at or below last year’s levels.
More Homes Available for Buyers
The housing market has seen a significant increase in inventory, with the total number of homes for sale rising by 33% compared to the same week in 2023. Fresh listings were also up by 6.6%, marking 45 consecutive weeks of increased housing stock.
Longer Time on the Market
Homes are spending more time on the market compared to last year. During the week ending Sept. 14, houses stayed listed for eight days longer than during the same period in 2023. In August, the typical home spent an average of 53 days on the market. With more options available and lower mortgage rates, buyers feel less pressure to make quick decisions, giving sellers a reason to be patient and flexible.
