Housing News

Home Prices Ease as Mortgage Rates Hold Steady

Homebuyers saw little change in borrowing costs this week, but lower listing prices and growing housing stock are creating more purchasing opportunities.

The average mortgage interest rate for a 30-year fixed-rate loan was 6.66% for the week ending Aug. 27, according to Freddie Mac. That was up just one basis point from 6.65% the previous week.

“Mortgage rates changed little this week,” Freddie Mac Chief Economist Sam Khater said in a statement. “The economy remains resilient, demonstrated by steady consumer spending and rising household incomes. More homes coming on the market and slower price growth in many areas are giving buyers better options and helping create a more balanced housing market.”

A year ago, the average 30-year fixed mortgage rate was 6.56%.

Homebuyers purchasing a $400,000 home with a 20% down payment would pay about $2,056 a month in principal and interest at this week’s average rate. That is about $21 more than at last year’s average rate, before property taxes and homeowners insurance are added.

Mortgage rates have remained in the mid-6% range over the past month.

With inflation remaining elevated, the U.S. Federal Reserve may not lower interest rates in the near future. While mortgage rates are separate from the Fed’s benchmark rate, they usually follow the same trajectory.

The Fed’s preferred measure of inflation, the Personal Consumption Expenditures Price Index, rose 3.7% annually in July. That was slightly higher than economists’ forecast of 3.6% and above the Fed’s 2% target. This gives financial markets little reason to expect an immediate shift in monetary policy toward lower rates.

While mortgage rates have offered homebuyers limited relief, listing prices have moved in a more favorable direction.

The national median home list price fell 2.4% from a year earlier to $428,950 in July, according to Realtor.com. It marked the ninth consecutive month of annual declines.

“Combined with growing inventory and homes sitting on the market slightly longer, this points to a market that’s rebalancing, giving buyers real room to negotiate even where rates haven’t budged,” Realtor.com Senior Economist Jake Krimmel said in a statement.

Bright MLS Chief Economist Lisa Sturtevant expects mortgage rates to remain close to their current level during the second half of the year. However, easing home price growth could still improve the affordability picture for some homebuyers.

“Affordability for starter homes has improved slightly from a year ago as home price growth has slowed and incomes continue to rise,” said Sturtevant in a statement. “Home price growth will ease, which will improve affordability enough to bring some buyers into the market.”