By Melissa Dittmann Tracey
Fed Chair Jerome Powell: Higher rates remain necessary now because bringing inflation down sustainably is “the absolute best thing we can do for the housing market.”
CHICAGO – About 20% of real estate professionals say that many aspiring home buyers are holding out for mortgage rates to fall before making a move – with agents calling that one of the biggest factors limiting real estate transactions lately, according to the National Association of Realtors®’ “2024 Member Profile.” But the super-low rates of the past – to the likes of 2% and 3% during the pandemic – have faded further into the rear-view mirror. Economists say buyers should stop waiting because rates like that aren’t likely to return anytime soon.
Federal Reserve Chair Jerome Powell said last week that he remains committed to keeping interest rates high until a return to 2% inflation that he believes will aid a broader economic recovery (as of this week, the consumer price index was 3%). Still, Powell acknowledged, “there’s no question that higher interest rates are making it harder to buy homes in the short term … [but] the absolute best thing we can do for the housing market and for the economy is to sustainably bring inflation down.”
Freddie Mac reports that the 30-year fixed-rate mortgage has been hovering near 7% over recent weeks, and averaged 6.89% this week. Five years ago, rates were in the 3% range.
Rates aren’t likely to be at the ultra-low averages they have been over the last 10 to 15 years. “For those thinking of mortgage interest rates—the implication has a ripple effect—buyers waiting for mortgage rates to again be at once-in-a-lifetime lows are likely going to be waiting a very long time,” says Jessica Lautz, NAR’s deputy chief economist.
At this week’s 6.89% average, home buyers with a 20% down payment on a $400,000 home would likely have a monthly mortgage payment of $2,105; for a 10% downpayment, buyers would have a $2,369 monthly payment, Lautz says.
Freddie Mac reports the following national averages with mortgage rates for the week ending July 11:
- 30-year fixed-rate mortgages: averaged 6.89%, falling from last week’s 6.95% average. A year ago, 30-year rates averaged 6.96%.
- 15-year fixed-rate mortgages: averaged 6.17%, dropping from last week’s 6.25% average. Last year at this time, rates averaged 6.30%.
© 2024 National Association of Realtors® (NAR)
