Mortgage rates held steady this week, remaining unchanged from last week but still lingering at a near three-year high–a level one economist says is having a “chilling effect” on the housing market.
The latest Freddie Mac Primary Mortgage Market Survey® released Thursday shows the average 30-year fixed-rate mortgage rate remaining at 7.40%, the same level as last week’s report. The 30-year FRM also is up year-over-year from 6.27% last year. The 15-year FRM averaged 6.71%, down from last week when it averaged 6.73%. A year ago at this time, the 15-year FRM averaged 5.52%.
At presstime, the average rate was sitting at 7.33% Thursday afternoon, according to Mortgage News Daily.
“Though rates didn’t move higher this week, they remain at their highest levels in nearly three years,” said Bright MLS Chief Economist Lisa Sturtevant in a statement. “Higher rates are having a chilling effect on the housing market. For some would-be buyers, the numbers simply don’t pencil. For others, higher rates create a psychological obstacle, amping up consumer anxiety that is already very high.”
Sturtevant added that with inflation running at 3.7% in September, the odds of another Fed rate hike this year are almost certain, likely in December.
“That expected rate hike will be built into mortgage rates long before the Fed’s December meeting. As a result, we could see rates move higher over the next few weeks,” she noted.
Realtor.com Senior Economist Jiayi Xu said with September’s CPI coming in slightly hotter than expected, and concern over the uptick in core CPI rising, price pressures may be broadening beyond energy into other categories.
“Looking ahead, the acceleration in core CPI, a sign of sticky inflation, reinforces the case for another rate hike by December and could set the stage for additional hikes in early 2027,” she said. “In other words, mortgage rates are unlikely to ease anytime soon, but bringing inflation under control would pave the way for lower rates and a much-needed boost to affordability for the year ahead.
But she also noted that buyers who stay engaged may find footing in a market where motivated sellers are increasingly willing to negotiate. “The share of price cuts hit a four-year high in September, and the share of listings pulled from the market remained in line with a year ago, suggesting sellers are committed to transacting,” she said. “For home buyers, it is important to rate-proof their budget and ensure they are financially positioned to act when the right opportunity arises.”
Sturtevant also noted it’s possible that there will be fewer than 4 million existing home sales nationally for the year, “the first time we’ve seen annual sales below that level since the 1990s,” she said.
For the full Freddie Mac report, click here.
