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Rates for home loans fell to a 10-week low, but the housing market is still stalled.
In the week ending Feb. 27, 30-year fixed-rate mortgages averaged 6.76%, Freddie Mac announced Thursday. That’s the sixth-straight weekly decline for the popular mortgage product, and its lowest level since before Christmas. Those figures don’t include fees or points, and rates in some parts of the country may be higher or lower than the national average.
Last week, the 30-year-fixed averaged 6.85%.
While most mortgage-market observers began the year believing rates were more likely to rise than fall, the national housing market isn’t doing very well even at the current levels. Home contract signings slid to an all-time low in January, the National Association of Realtors said Thursday, meaning closings in future months will also decline.
“Mortgage rates declined along with the falling yield on the 10-year Treasury. Those declining bond yields reflect expectations that the economy is slowing,” said Bright MLS Chief Economist Lisa Sturtevant in an emailed statement. “Although a slowing economy may not seem like a good thing, lower rates could give the housing market the shot in the arm that it so desperately needs.”
All real estate is local
Any cooling in the economy is happening very gradually, and likely in some markets and not others. Lisa Barall-Matt, a real estate broker in greater Hartford, Connecticut, says demand – and therefore prices – in her market remain “mind-blowing.”
With prices and rates high, current homeowners have little incentive to sell, said Barall-Matt, who’s with Berkshire Hathaway HomeServices. There are currently just 17 properties on the market, compared to over 200 in more normal, pre-pandemic times. Yet higher rates aren’t deterring would-be buyers, possibly because the area remains relatively affordable compared to other markets. The median priced home was $433,700 in February, according to Realtor.com data.
In January, the Northeast was the only section of the country to see any gains in contract signings, NAR said Thursday.
In general, buyers shouldn’t wait for rates to make decisions on what to do, Sturtevant said. “It seems likely that rates will fall in the weeks ahead, though they are not expected to come down significantly,” she wrote “Rather, consumers should accept rates that are volatile week-to-week, but that are gradually moving lower.”
