Mortgage rates fall to a two-month low, but buyers are still on the sidelines
Mortgage rates fall to a two-month low, but buyers are still on the sidelines
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Rates for home loans fell for the fifth straight week, but buyers aren't feeling the love just yet.
In the week ending Feb. 20, 30-year fixed-rate mortgages averaged 6.85%, Freddie Mac announced Thursday. That puts the popular mortgage product at exactly the level at which it closed 2024. Those figures don't include fees or points, and rates in some parts of the country may be higher or lower than the national average.
Last week, the 30-year-fixed averaged 6.87%.
Even as mortgage rates continue to tick gradually lower, it hasn't provided any relief for a challenging housing market. Homebuilders broke ground on fewer homes in January, the government said Wednesday, meaning there won't be a big influx of new homes for Americans to buy any time soon.
Residential construction will be suppressed in 2025 'by elevated mortgage rates and an erosion in homebuilder sentiment due to higher input costs resulting from tariffs and possibly labor shortages resulting from President Trump's immigration policies,' wrote Nancy Vanden Houten, an economist at Oxford Economics, in an analysis out Wednesday.
Builder sentiment tumbled to a five-month low in February, the National Association of Home Builders said Tuesday.
More: Why is housing so expensive? There simply aren't enough homes.
Tight conditions are squeezing buyers across the country. In Westchester County, New York, real estate agent Pamela Grunstein is navigating a market that has 1.6 months of supply – a far cry from the 6 months or so that's long been considered the sign of an evenly balanced market.
Just like at the height of the pandemic, buyers are waiving contingencies and bidding properties sharply higher. But, said Grunstein, who works with the Francie Malina Team at Compass, 'It's actually gotten worse because the prices are higher. And it's trickier because of the higher interest rates.'
Many would-be buyers may be opting to stay on the sidelines. Mortgage applications to purchase a home – not refinances – were down 6% in the most recent week, the Mortgage Bankers Association said Wednesday.
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