The average interest rate for a 30-year fixed-rate mortgage in the United States has fallen for the second week in a row, reaching 6.69%, the lowest point since October 24th, according to Freddie Mac’s Thursday announcement. This represents a decrease from 6.81% the previous week.
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A Positive Shift, But Challenges Remain in the Housing Market
While this decline offers a glimmer of hope for potential homebuyers, borrowing costs remain significantly higher than they were in September. Experts at Redfin Corp. predict that 30-year mortgage rates will hover around 7% throughout 2025. This projection is based on speculation that the Federal Reserve will implement only two policy rate reductions next year, contingent on a robust economy and the enactment of President-elect Donald Trump’s proposed tax cuts and tariffs.
Increased Buyer Interest Despite Affordability Hurdles
Despite the relatively small dip in rates, Sam Khater, Freddie Mac’s chief economist, noted a “notable improvement” in purchase demand. This responsiveness to even minor rate fluctuations underscores the persistent challenges of affordability in the current housing market. High home prices and limited inventory continue to pose significant obstacles for many aspiring homeowners.
Inventory Rises, But Affordability Remains a Key Concern
The supply of available homes is gradually approaching pre-pandemic levels, according to Joel Berner, Senior Economist at Realtor.com. However, the combination of stubbornly high listing prices and mortgage rates continues to restrict affordability for a substantial portion of potential buyers. While options are increasing, finding a home within reach remains a challenge for many.
Conclusion: A Market in Transition
The recent decline in mortgage rates signals a potential shift in the housing market, encouraging increased buyer interest. However, with rates expected to remain relatively high and affordability still a major hurdle, the market continues to present challenges for both buyers and sellers. The interplay between inventory levels, interest rates, and affordability will likely continue to shape the housing landscape in the coming months.
