Freddie Mac’s latest Primary Mortgage Market Survey (PMMS) for the week ending September 7 found that the 30-year fixed-rate mortgage (FRM) averaging 7.12% down six basis points from last week’s average of 7.18%. A year ago at this time, the 30-year FRM averaged 5.89%.
“For the fourth consecutive week, the 30-year fixed-rate mortgage hovered above seven percent,” said Sam Khater, Freddie Mac’s Chief Economist. “The economy remains buoyant, which is encouraging for consumers. Though while inflation has decelerated, firmer economic data have put upward pressure on mortgage rates which, in the face of affordability challenges, are straining potential homebuyers.”
Also this week, Freddie Mac reported the 15-year FRM averaging 6.52%, down from last week when it averaged 6.55%. A year ago at this time, the 15-year FRM averaged 5.16%.
“The Freddie Mac fixed rate for a 30-year mortgage notched a second week of decline, falling six basis points to 7.12%, as a holiday-shortened week offers a smaller number of data points to shift expectations on both the economy and recent price trends,” added Realtor.com Chief Economist Danielle Hale. “Taking a step back, the big picture remains largely unchanged, and the 30-year fixed mortgage rate has topped 7% for a fourth week in a row. The economy continues to chug along, but the pace is likely slowing, a change that is needed to help move inflation back to the 2% target. In addition to fewer job openings and slower hiring this summer, recent readings on inflation have shown progress. Anecdotal evidence in the Fed’s Beige Book aligns with the data pointing to slower growth and hiring as well as easing price pressures. Despite some upticks in the market for new homes, home sales activity overall remains relatively low. And although home price momentum picked up in August and has continued into early September, rent prices have trended lower, which will likely help move inflation back toward its target in the months ahead. Looking ahead, the economy is nearing an inflection point, and mortgage rate volatility may continue until it is clear that the economic landing has actually occurred, and we are not seeing a touch-and-go on growth that could reignite inflation.”
The downward trend in rates was no respite for home seekers as the Mortgage Bankers Association (MBA) reported that overall application volume fell to levels last recorded in December 1996, sliding 2.9% week-over-week in the process.
“Mortgage applications declined to a 27-year low last week, as borrowers continue to feel the squeeze of mortgage rates hovering above 7%,” said MBA President and CEO Bob Broeksmit. “The housing market appears to be stuck heading into autumn, with sales activity likely to stay stagnant until housing inventory increases, and mortgage rates decline to more affordable levels.”
Those looking to jump into the housing market continue to face the combined forces of low inventory and high rates, a spike in home prices nationwide has been added to affordability hurdle, as Redfin reports the median home-sale price rose 5% year-over-year to $380,000, representing the biggest uptick in 10 months. In addition, the typical monthly mortgage payment hit an all-time high of $2,649.
According to Redfin, median home-sale prices in Miami rose 17% year-over-year during the four weeks ending August 27, marking the largest increase the metro area has seen since October 2022. Miami’s rise also marks the greatest increase among the 50 most populous U.S. metros, though almost all of those metros posted year-over-year price gains in August. Prices declined in just U.S. six metros, including Austin, Texas; Phoenix; Portland, Oregon; Fort Worth, Texas; Las Vegas; and San Antonio, Texas.
“For homeowners contemplating a sale, these factors have generally tended to push the decision toward staying put,” noted Hale. “However, the Realtor.com August Housing Trends report showed an atypical uptick in newly listed homes for the month suggesting the possibility that we’ve reached a point where some current homeowners are ready for a change despite the market’s challenges. Nevertheless, the number of homes for sale remains low and the number of newly listed homes has lessened the gap but continues to trail behind prior years. This has kept housing markets surprisingly competitive, especially areas highlighted in Realtor.com’s 2023 Hottest Zip Codes report. A mix of affordable refuges and neighborhoods near higher-priced major metros suggest that while some workers continue to enjoy flexibility, return-to-office adjustments could be pushing some to pay a premium for proximity.”