The 30-year fixed-rate mortgage (FRM) averaged 6.67% this week, another decline from last week’s dip to 6.69%. This is the third consecutive week of rates declining, according to the latest Primary Mortgage Market Survey® (PMMS®) from Freddie Mac released Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.67% as of June 22, 2023, down from last week when it averaged 6.69%. A year ago at this time, the 30-year FRM averaged 5.81%.
- 15-year fixed-rate mortgage averaged 6.03%, down from last week when it averaged 6.10%. A year ago at this time, the 15-year FRM averaged 4.92%.
What the experts are saying:
“Mortgage rates slid down again this week but remain elevated compared to this time last year,” said Sam Khater, Freddie Mac’s chief economist. “Potential homebuyers have been watching rates closely and are waiting to come off the sidelines. However, inventory challenges persist as the number of existing homes for sale remains very low. Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.”
Realtor.com economist, Jiayi Xu commented:
“The Freddie Mac fixed rate for a 30-year mortgage declined for the third week in a row by 2 basis points to 6.67% as markets absorbed a strong uptick in new construction. While the headline CPI dropped significantly in May to 4.0%, the core CPI— which includes goods and services excluding volatile food and energy – has not retreated as much as the overall inflation in recent months, creating a troubling situation for policymakers. Meanwhile, the Fed opted not to raise short-term rates at June’s FOMC meeting, choosing to wait for additional data and see how recent rate increases are influencing price growth and the real economy. In the coming months, we may see a faster slowdown in inflation because the growth in the shelter index, the largest contributor to inflation growth, has passed its peak and started to trend down in April.
“Nevertheless, as the inflation is well-above the 2% target and the labor market is still strong, FOMC signaled that the Federal Funds rate will be half a point higher than previously expected at the end of 2023, which is also half a point higher than the current rate. In other words, borrowing, including home purchases, will likely remain expensive through the remainder of the year.
With the potential for additional rate hikes ahead, mortgage rates will remain elevated throughout the remainder of the year. As a result, affordability will continue to be an important factor in buyers’ home purchasing decisions. According to Realtor.com’s recent hottest markets report, home buyers continue to flock to relatively inexpensive markets below the national median price, leading to notable price growth in these otherwise affordable areas. The heightened competition in these markets may worsen the conditions faced by buyers with financial constraints, particularly due to the already limited supply of affordable homes. While the rise in new construction is encouraging, there is a pressing need to build homes catering to all income levels. Our joint research with the National Association of REALTORS confirms this urgent necessity, especially in the lowest price tier where the shortage of affordable housing is most severe.
“However, there is still some good news for home sellers. As improving homes before selling is one of the top concerns among sellers, lower prices for household furnishings and supplies may bring a sense of relief. While this improvement primarily affects sellers, buyers may also benefit, as the high cost of home repairs are often passed on to them in the end. In May, the household furnishing and supplies index increased 4.1% over the prior year while the core inflation increased 5.3%. Compared to the previous month, prices for household furnishing and supplies dropped 0.4% versus an increase of 0.4% for core prices, on a seasonally adjusted basis.”
