Mortgage rates continue to drift upward on strong economic data, but there are signs that rates could tick down slightly in the coming weeks.
The 30-year fixed-rate mortgage averaged 7.04% this week, according to Freddie Mac’s latest survey. It’s the first time rates have topped 7% since May; a year ago, average rates were significantly lower at 6.6%.
Mortgage News Daily, which uses a different set of criteria to determine daily averages, had the 30-year rate pegged at 7.11% — but that was down slightly from earlier in the week following the release of the latest inflation data.
Lower rates in time for spring?
Headline inflation was up, largely driven by energy prices, but core inflation slowed, noted Danielle Hale, chief economist at Realtor.com.
“As a result, I expect mortgage rates to stop climbing in the second half of January,” Hale said, adding that there could be some volatility coinciding with the upcoming change of presidential administrations.
The recent CPI report points toward calming inflation, said Lawrence Yun, chief economist at the National Association of Realtors, which could push mortgage rates down — “perhaps to 6.5% just in time for the spring home-buying season,” Yun said.
Buyer activity slows
Indicators of homebuying activity, such as touring and pending sales, have slowed nationally, but that may have to do more with other factors including a cold snap across the Midwest and Northeast and the devastating fires in Southern California, according to a new Redfin report.
“There’s a feeling of overwhelming sadness and stress about the destruction we’re seeing in so many neighborhoods,” said Susan Brown, a Redfin Premier agent in the Los Angeles area. “Part of that is because so many people now have to find new homes, and we’re seeing a chaotic ripple effect in the market.”
Redfin’s Homebuyer Demand Index is down 11% compared to a month earlier, and new listings have slowed significantly, falling 3.6% year-over-year — the biggest decline since September 2023, the report notes.
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Author: Dave Gallagher
