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Rates for home loans are little changed this week from near recent highs, even as buyers try to adapt to a housing market that may feel very different than just a few weeks ago.
The 30-year fixed-rate mortgage averaged 5.23% in the week ending June 9, Freddie Mac said Thursday. That’s up from 5.09% last week and 2.96% a year ago.
The average 15-year fixed-rate mortgage was 4.38%, up from 4.32% last week. At this time last year, it averaged 2.23%.
Those rates don’t include fees and other costs associated with obtaining home loans.
Related: Compare Current Mortgage Rates
What’s Next for the Housing Market?
In May, mortgage rates hit 5.30%, the highest in more than a decade, but have pulled back since then. Still, the months-long grind higher in rates—and continued slim pickings of houses to buy—has scared off many would-be buyers.
The weekly measure of home loan applications by the Mortgage Bankers Association (MBA) hit its lowest point in 22 years, the group said Wednesday.
As Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a press release, “The purchase market has suffered from persistently low housing inventory and the jump in mortgage rates over the past two months. These worsening affordability challenges have been particularly hard on prospective first-time buyers.”
In May, the supply of houses to buy nationwide was nearly half what it was in May 2020, at the start of the Covid-19 pandemic, according to a recent report from Realtor.com. But since then, inventory has ticked higher, according to Realtor.com data released Thursday, which projects more owners will continue to list their homes for sale.
“The inventory recovery is expected to eventually help tame the frenzied pace of home price growth, and today’s data offer a hint of relief on the horizon, though a very distant one,” said Realtor.com Chief Economist Danielle Hale. However, “we will need to see much more inventory to meaningfully impact the rate of home price increases.”
What Should Buyers Do?
At the offices of the Dobbs Ferry, New York-based Francie Malina Team, a Compass real estate franchise, the phone had been ringing off the hook for months, says Pamela Grunstein, a real estate agent with the group. Around Mother’s Day, “the market completely shifted,” Grunstein says. Now the phone rings just a few times a day, and some open houses that once could expect dozens of visitors have had zero traffic.
While this is a confusing time for buyers, there’s more opportunity now than some might realize. With some of the competition opting to wait it out, but sellers continuing to list properties, some buyers may get lucky, Grunstein says. And with little clarity on where interest rates will go from here, it may be wiser for them to buy now, if the right home comes along.
Hale agrees. “With more options, home shoppers may see a bit more negotiating room and time to make decisions, even as market conditions continue to favor sellers,” she said.