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Miami Herald
3 hours ago
- Business
- Miami Herald
The Mortgage Rate Shift That Could Change the Housing Market
Owning a home remains prohibitively expensive for many Americans, but experts believe a modest decline in mortgage rates could inject much-needed momentum into home sales and help revive the broader U.S. housing market. According to recent analysis from the National Association of Realtors (NAR), were mortgage rates to drop to 6 percent, an additional 5.5 million households would be able to afford a home, including 1.6 million renters. Affordability remains one of the key issues threatening the stability of the U.S. housing market. As experts have warned, the rising costs of buying a home-which have dragged ownership rates to a post-pandemic low this year-are exacerbated by persistently high borrowing costs, preventing a large number of Americans from entering the property market. Economists have recently pointed to higher-than-usual mortgage rates as a critical drag on the U.S. housing market, and others are now dubbing a possible drop to 6 percent as a "magic" figure that would expand the number of Americans who are able to buy. According to data from key organizations within the housing and mortgage markets, including the Mortgage Bankers Association (MBA) and the Federal Home Loan Mortgage Corporation (Freddie Mac), 30-year fixed mortgage rates are currently hovering at around about 6.75 percent. While these are below the levels seen in October 2023, when 30-year rates surged to around 8 percent, they are a far cry from the lows of under 3 percent during the pandemic. The rates have pushed homeownership out of reach for many. According to Housing Market Trends Report for June, the number of homes for sale in the U.S. rose nearly 30 percent year over year, marking the 20th straight month of increases. The latest market report from Zillow similarly showed that housing inventory hit a five-year high in June. NAR's research found that even a modest drop in rates to 6 percent would boost home sales by an estimated 3 percent in 2025 and by 14 percent in 2026. It added that approximately 10 percent of the additional households now able to buy would do so over 12 to 18 months. According to Mortgage News Daily's loan calculator, a 6 percent rate on 30-year mortgages would lower the monthly payment on a $300,000 loan to $1,799 from $1,946 at today's rates. NAR said that Atlanta, Dallas, Minneapolis, Cleveland, and Kansas City would see the greatest increase in home sales activity if rates dropped to 6 percent. Susan Wachter, an economist and professor of finance and real estate at the University of Pennsylvania's Wharton business school, told Newsweek that 6 percent could prove "a magic mortgage number that will push Americans to buy." However, she added that this will depend on the direction of inflation, and the Federal Reserve's response in the form of lower interest rates. Alexei Morgado, real estate agent and founder of Lexawise, told "Many of my clients tell me the same thing: They want to buy, but they feel that mortgage rates are holding them back." "And it's not just about the number itself," he continued. "What I hear most often is the fear of making a bad decision, of getting into something they can't sustain or that will later make them think, 'I rushed into it.' That feeling of paying more for the same thing is frustrating, discouraging, and puts them on hold." Susan Wachter of theUniversity of Pennsylvania's Wharton School told Newsweek: "Six percent could be a magic mortgage number that will push Americans to buy, but only if it comes about because inflation declines, bringing interest rates down, without a recession. The fear of buyers' remorse in a housing slowdown is sidelining buyers, including those who would newly qualify for a mortgage with rate drops." NAR Chief Economist Lawrence Yun, speaking to real estate professionals at the Residential Economic Issues & Trends Forum last month, said: "Your past clients are all happy. But for new homebuyers, their monthly payment obligation has increased, and this is what's killing the housing market. Mortgage rates are the magic bullet, and we're waiting and waiting until those come down." NAR Chief Economist Yun forecasts that mortgage rates will average 6.4 percent in the second half of 2025, and 6.1 percent next year. Related Articles Map Shows Cities Where Residents Are Looking to Move AwayYou Can Now Co-Own a 6-Bed Montecito MansionHow Tax Breaks for Homeowners Can Affect Your 2025 ReturnsHow Much Boomers, Millennials and Gen Z Spent on Their Homes in 2024 2025 NEWSWEEK DIGITAL LLC.
Newsweek
7 hours ago
- Business
- Newsweek
The Mortgage Rate Shift That Could Change the Housing Market
Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources. Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content. Owning a home remains prohibitively expensive for many Americans, but experts believe a modest decline in mortgage rates could inject much-needed momentum into home sales and help revive the broader U.S. housing market. According to recent analysis from the National Association of Realtors (NAR), were mortgage rates to drop to 6 percent, an additional 5.5 million households would be able to afford a home, including 1.6 million renters. Why It Matters Affordability remains one of the key issues threatening the stability of the U.S. housing market. As experts have warned, the rising costs of buying a home—which have dragged ownership rates to a post-pandemic low this year—are exacerbated by persistently high borrowing costs, preventing a large number of Americans from entering the property market. Economists have recently pointed to higher-than-usual mortgage rates as a critical drag on the U.S. housing market, and others are now dubbing a possible drop to 6 percent as a "magic" figure that would expand the number of Americans who are able to buy. What To Know According to data from key organizations within the housing and mortgage markets, including the Mortgage Bankers Association (MBA) and the Federal Home Loan Mortgage Corporation (Freddie Mac), 30-year fixed mortgage rates are currently hovering at around about 6.75 percent. While these are below the levels seen in October 2023, when 30-year rates surged to around 8 percent, they are a far cry from the lows of under 3 percent during the pandemic. The rates have pushed homeownership out of reach for many. According to Housing Market Trends Report for June, the number of homes for sale in the U.S. rose nearly 30 percent year over year, marking the 20th straight month of increases. The latest market report from Zillow similarly showed that housing inventory hit a five-year high in June. In an aerial view, single family homes on April 19, 2025 in Thousand Oaks, California. In an aerial view, single family homes on April 19, 2025 in Thousand Oaks, research found that even a modest drop in rates to 6 percent would boost home sales by an estimated 3 percent in 2025 and by 14 percent in 2026. It added that approximately 10 percent of the additional households now able to buy would do so over 12 to 18 months. According to Mortgage News Daily's loan calculator, a 6 percent rate on 30-year mortgages would lower the monthly payment on a $300,000 loan to $1,799 from $1,946 at today's rates. NAR said that Atlanta, Dallas, Minneapolis, Cleveland, and Kansas City would see the greatest increase in home sales activity if rates dropped to 6 percent. Susan Wachter, an economist and professor of finance and real estate at the University of Pennsylvania's Wharton business school, told Newsweek that 6 percent could prove "a magic mortgage number that will push Americans to buy." However, she added that this will depend on the direction of inflation, and the Federal Reserve's response in the form of lower interest rates. What People Are Saying Alexei Morgado, real estate agent and founder of Lexawise, told "Many of my clients tell me the same thing: They want to buy, but they feel that mortgage rates are holding them back." "And it's not just about the number itself," he continued. "What I hear most often is the fear of making a bad decision, of getting into something they can't sustain or that will later make them think, 'I rushed into it.' That feeling of paying more for the same thing is frustrating, discouraging, and puts them on hold." Susan Wachter of the University of Pennsylvania's Wharton School told Newsweek: "Six percent could be a magic mortgage number that will push Americans to buy, but only if it comes about because inflation declines, bringing interest rates down, without a recession. The fear of buyers' remorse in a housing slowdown is sidelining buyers, including those who would newly qualify for a mortgage with rate drops." NAR Chief Economist Lawrence Yun, speaking to real estate professionals at the Residential Economic Issues & Trends Forum last month, said: "Your past clients are all happy. But for new homebuyers, their monthly payment obligation has increased, and this is what's killing the housing market. Mortgage rates are the magic bullet, and we're waiting and waiting until those come down." What Happens Next? NAR Chief Economist Yun forecasts that mortgage rates will average 6.4 percent in the second half of 2025, and 6.1 percent next year.
Business Standard
9 hours ago
- Business
- Business Standard
Markets Rally as Trade Deals, Sector Gains and Global Optimism Drive U.S. Stocks Higher
U.S. indexes surged on trade deals with Japan and the Philippines, strong sector performances and upbeat global markets, despite a housing sales dip. The Dow jumped 507.85 points (1.1%) to 45,010.20, the Nasdaq climbed 127.33 points (0.6%) to 21,020.02 and the S&P 500 advanced 49.29 points (0.8%) to 6,358.91. The U.S. struck major trade deals with Japan and the Philippines. Japan agreed to a 550 billion USD investment, market access and a 15% export tariff. The Philippines will pay 19% duty while accepting U.S. goods tariff-free. Trump claims huge job gains and profit share, boosting investor optimism. National Association of Realtors released a report showing existing home sales in the U.S. pulled back by more than expected in the month of June. NAR said existing home sales slumped by 2.7% to an annual rate of 3.93 million in June after jumping by 1.0% to a revised rate of 4.04 million in May. Oil service stocks turned in some of the market's best performances on the day, with the Philadelphia Oil Service Index spiking by 4.1%. Computer hardware stocks were substantially strong, as reflected by the 2.3% surged by the NYSE Arca Computer Hardware Index. Airline, pharmaceutical, networking and healthcare stocks also saw significant strength, moving higher along with most of the other major sectors. Asia-Pacific stocks moved mostly higher. Japan's Nikkei 225 Index spiked by 3.5% while Hong Kong's Hang Seng Index jumped by 1.6%. The major European markets also moved to the upside on the day. While the French CAC 40 Index surged by 1.4%, the German DAX Index advanced by 0.8% and the U.K.'s FTSE 100 Index rose by 0.4%. In the bond market, treasuries are giving back ground after moving higher over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.4 basis points at 4.38%.
The Independent
12 hours ago
- Business
- The Independent
U.S. house sales drop as prices soar to record levels
Sales of previously owned homes in the U.S. have dropped to the lowest levels since last September, as the national average price for houses hit unprecedented levels. Home prices increased on an annual basis for the 24th consecutive month, with the national median sales price rising two percent in June from a year earlier to $435,300 – an all-time high. Existing home sales fell by 2.7 percent from May to June, according to the National Association of Realtors, and the latest home sales fell short of the 4.01 million pace economists were expecting, according to FactSet. The U.S. housing market has been in a slump since early 2022, when mortgage rates began to climb from pandemic-era lows. Home sales fell last year to their lowest level in nearly 30 years, leading to a lackluster spring homebuying season – traditionally the busiest period of the year for the housing market. Stubbornly high mortgage rates and rising prices have intensified the hardships for would-be homebuyers who had already been pummeled by a real estate market that overheated during the pandemic. While the number of homes on the market has increased sharply from a year ago, it remains well below normal levels, meaning prices continue to rise even as sales slow. 'The second half of the year really depends on what happens with mortgage rates,' Lawrence Yun, NAR's chief economist, told The Associated Press. High mortgage rates can add hundreds of dollars a month in costs for borrowers, limiting their purchasing power. So far this year, the average rate on a 30-year mortgage has remained relatively close to 7 percent, according to mortgage buyer Freddie Mac. Homes purchased last month likely went under contract in May and June, when the average rate on a 30-year mortgage ranged from 6.76 percent to 6.89 percent. Yun estimates that if the average rate on a 30-year mortgage were to fall to 6 percent that would lead to an additional roughly half-million more homes sold. 'If the mortgage rate remains stuck at this level, we are essentially looking at very small changes in our home sales and home price condition, but if the mortgage rate was to drop, we know there will be a more meaningful increase in sales,' he said. The housing market's affordability crunch is keeping many aspiring first-time homebuyers on the sidelines. They accounted for 30 percent of homes sales last month, unchanged from May, NAR said. Historically, they made up 40 percent of home sales. Home shoppers who can afford to buy at current mortgage rates or pay in cash are benefiting from more properties on the market. There were 1.53 million unsold homes at the end of last month, down 0.6 percent from May, but up nearly 16 percent from June last year, NAR said. That's still well below the roughly 2 million homes for sale that was typical before the pandemic, however. June's month-end inventory translates to a 4.7-month supply at the current sales pace, up from a 4.6-month pace at the end of May and 4 months in June last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers. Homes for sale are staying on the market longer as sales remain in the doldrums. Properties typically remained on the market for 27 days last month before selling, up from 22 days in June last year, NAR said. The housing market slowdown isn't all bad, if you're a home shopper who can afford to buy. In June, some 20.7 percent of homes listed for sale had their price reduced, the highest share for the month of June going back to at least 2016, according to Increasingly, however, many sellers are opting to pull their home off the market rather than lower prices. The number of properties taken off the market without having sold jumped 47 percent in May from a year earlier, according to
Daily Mail
16 hours ago
- Business
- Daily Mail
Housing market set to plunge to a 30-year low
Home sales are set to plunge to a 30-year low — with experts warning the slump could deepen into a full‑blown collapse. Just four million transactions are expected in the US this year, according to new data from That would mark the lowest level since 1995, according to the National Association of Realtors. Buyers have been scared off by a rocky economy, surging HOA fees, and punishing mortgage and insurance rates, leaving sellers slashing prices to lure offers. 'Even with more homes on the market, buyer response has remained muted compared to what we'd expect from similar supply shifts in the past,' chief economist Danielle Hale said of the shocking figures. Thirty‑year mortgage rates will average 6.7 percent across 2025 and end the year at around 6.4 percent. That is slightly higher than previous forecasts. Median home prices have jumped 52 percent since May 2019, far outpacing wage growth of just 30 percent, NAR data shows. Despite the frozen market, economists do not predict a correction in home prices but conversely see them rising 2.5 percent through 2025. This is largely driven by sellers who refuse to drop their asking price and are instead pulling their homes off the market in droves. Others have been forced to slash their asking prices and accept a more reasonable offer in the current uncertain market. More than 20 percent of listed homes had price reductions in June, the highest share for the month since 2016. Phoenix, Arizona, is at the epicenter of the delistings trend, seeing more homes pulled from the market than any other area. Economists believe this is because areas in the South and West have seen inventory hit pre-pandemic levels but prices remaining flat or are even falling. Last week Moody's Chief Economist Mark Zandi issued a 'red flare' warning for the housing market and cautioned that it could drag down the entire economy. 'I sent off a yellow flare on the housing market in a post a couple of weeks ago, but I now think a red flare is more appropriate,' Moody's Chief Economist Mark Zandi wrote on X. A 'red flare' warning suggests the market is experiencing major instability and a fall is imminent. 'Home sales are already uber depressed,' Zandi wrote. 'Housing will thus soon be a full-blown headwind to broader economic growth, adding to the growing list of reasons to be worried about the economy's prospects later this year and early next.'
