The weekly average rate on a 30-year fixed-rate mortgage declined for the most recent week, breaking a five-week uptrend.
For the week ending Aug. 12, the mortgage rate was at 6.67 percent, marginally down from 6.69 percent in the prior week, according to data from Freddie Mac. Since the week ending July 1, rates have been rising every week.
In an Aug. 12 report, real estate marketplace Zillow credited the latest softer jobs and weaker inflation data for taking “some pressure off mortgage rates.”
The U.S. labor market stalled last month, with payrolls
by 23,000 in July, well below estimates of 80,000 new job additions. The July number was below the average monthly gain of 34,000 new jobs in the previous 12 months.
Meanwhile, the annual inflation rate
to 3.4 percent in July. This was the second straight monthly decline after the rate jumped from 2.4 percent in February to 4.2 percent in May following the outbreak of the U.S.–Iran war.
According to Zillow, softer payroll and inflation data from July weakened the case for the Federal Reserve to raise its benchmark interest rate at the next meeting, which could have been bullish for mortgage rates.
While the next move for the Fed “is still a hike” in interest rates, the inflation data allows it to temporarily stall before making such a decision, Zillow said.
“Despite some of the softer macro data, mortgage rates are still higher than a year ago. After buyers enjoyed improving affordability for the first half of the year, the rest of the year will be an uphill climb,” according to the report.
Zillow predicted mortgage rates would decline only marginally to 6.5 percent by the end of this year, which would be higher than the 6.2 percent rate at the end of last year.
Highlighting the recent week’s mortgage rates, Sam Khater, Freddie Mac’s chief economist, said in an Aug. 13 statement, “Housing affordability has improved from a year ago, and recent increases in purchase and refinance applications suggest that borrowers continue to respond to even modest changes in mortgage rates.”
For the week ending Aug. 7, mortgage applications had risen by 3.6 percent from a week back, according to the latest statement from the Mortgage Bankers Association. Applications for home purchases and refinancings increased from the prior week.
Housing Affordability
While the mortgage rate declined for the most recent week, it remains elevated. Since around May, the weekly rate has hovered about the 6.5 percent level, according to Freddie Mac.
Amid higher rates, buyers are dropping out of the housing market. There were an estimated 51.3 percent more home sellers in the market than buyers in July, up from 47.9 percent a month back, according to an Aug. 13 statement from real estate marketplace Redfin.
Asad Khan, a senior economist at Redfin, said in the statement that rising mortgage rates this summer are one reason many would-be buyers are backing away from purchasing a property. However, since buyers are dropping off faster than sellers, the remaining buyers can have more negotiating power.
“That makes the stretch between now and Labor Day a potential sweet spot for people who need to move,” Khan said.
“Buyers have leverage, while motivated sellers may be willing to negotiate before the early-fall rush brings some buyers back to the market. This could be the best chance for buyers and sellers to meet in the middle.”
To tackle the housing affordability crunch, President Donald Trump
two executive orders on March 13. The orders aim to improve homeownership opportunities for people by increasing access to mortgages and cutting down regulatory burdens.
In one of the orders, Trump directed the Consumer Financial Protection Bureau to propose amendments to regulations that restrict community banks and other small financial institutions from issuing mortgages.
More recently, on July 11, the 21st Century ROAD to Housing Act became
. The legislation seeks to improve housing affordability through measures such as rolling back regulations and permitting requirements, as well as offering financial support to homebuilders, buyers, and state and local governments.
