Homebuyers finally managed to catch a break after weeks of increasing mortgage rates and hikes in home prices. According to Freddie Mac, the 30-year fixed mortgage has dropped for the second straight week and is now at 5.30%. The mortgage rate previously peaked at 5.81%, its highest mark since 2008.
In its report, Freddie Mac attributed the drop to surging inflation and the fears of recession. Sam Khater, the chief economist of this government-sponsored company, also predicts the normalization of the housing market if “home price growth materially slows due to the combination of low housing affordability and an expected economic slowdown.”
It remains to be seen whether the drop in mortgage rates will help the home market to recover from recent blows. The National Association of Realtors recently reported that home sales in the United States dipped to a two-year low. Besides the decade-high mortgage rates, the reason for the home market cooldown was also the high prices. The national median home price reached $407,600 in June, representing a record since the data started being measured in the late 1990s.
While the homebuyers might have to wait a bit more for a significant relief, some positives are on the horizon. More homes are getting on the market in recent weeks, according to data shared by Realtor.com, which will make it easier for buyers to find a home in their price range. On the other hand, the sellers might be willing to negotiate more due to increased competition.