The 30-year fixed-rate mortgage (FRM) increased from last week’s average of 6.78% to an average of 6.81% this week, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.81% as of July 27, 2023, up from last week when it averaged 6.78%. A year ago at this time, the 30-year FRM averaged 5.3%.
- 15-year fixed-rate mortgage averaged 6.11%, up from last week when it averaged 6.06%. A year ago at this time, the 15-year FRM averaged 4.58%.
The takeaways:
“Mortgage rates inched up slightly after a significant decline last week,” said Sam Khater, Freddie Mac’s chief economist. “Higher interest rates continue to dampen activity in interest rate-sensitive sectors, such as housing. However, overall U.S. consumer confidence is unwavering, surging to a two-year high in the Conference Board’s Consumer Confidence Index for July 2023. Rising consumer confidence often leads to greater spending, which could drive more consumers into the housing market.”
“The Freddie Mac fixed-rate for a 30-year mortgage climbed back towards 7% this week as 10-year treasury yields climbed and markets anticipated Wednesday’s Fed meeting,” said realtor.com® Economic Data Analyst Hannah Jones. “The most recent inflation and employment data showed slowing price growth and more moderate hiring, but still-robust consumer spending kept inflation elevated above the 2% target. As a result, the FOMC raised the target policy rate a quarter point in Wednesday’s meeting, continuing on the contractionary path in pursuit of a healthy inflation level. The committee’s statement asserts their continued commitment to bringing down inflation while acknowledging that the full impact of the rate hikes and credit tightening has not yet been realized. Chair Powell emphasized a data-informed approach to future rate hikes, citing that restoring price stability will likely ‘require a period of below-trend growth and some softening of labor market conditions.’
“While the median list price fell compared to last year in June, the cost of financing a median-priced U.S. home, assuming a 20% down payment, rose 12.4% in the same timeframe,” added Jones. “Many shoppers have adjusted to elevated mortgage rates, which have been in the 6% – 7% range for almost a year, and are willing to participate in today’s market. However, seller activity remains sluggish as homeowners are hesitant to list their home for sale and buy into the new, higher mortgage rate environment. Fewer homeowners have listed their home for sale than the previous year for the past 54 weeks, and the overall number of homes on market has recently fallen below last year’s levels. As a result, some markets are seeing high levels of competition as eager buyers compete for the relatively few homes on the market. Home prices have not fallen significantly nationally despite ongoing affordability challenges as limited for-sale inventory creates a more competitive environment.
“Some buyers have turned to new construction to secure a home, and builders are responding by increasing new home construction,” concluded Jones. “A higher level of new construction can help bridge the gap between buyer demand and home supply, making progress on the housing supply shortage that has opened up over the past decade. Both increased housing supply and eventual lower inflation would usher in a healthier housing market with more evenly matched supply and demand, taking some of the upward pressure off prices.”
