Flattened Mortgage Rates Signal Hope for Spring Housing Market

After nine consecutive weeks of decline, mortgage rates have finally leveled off this week, sparking interest in economic indicators as the busy spring season approaches for the housing market.

According to Freddie Mac, the average 30-year mortgage rate for this week stood at 6.62%. While an increase of 0.01 percentage point compared to the previous week, this ends the declining trend that began in November. The change is a result of investors becoming more optimistic about inflation and the potential for Federal Reserve rate cuts.

Buyers can now enjoy some savings as mortgage rates, a key factor in determining the cost of purchasing a home, have dropped by more than a percentage point since their peak in October, noted Sam Khater, Freddie Mac's chief economist. However, rates have remained relatively stable recently as the market takes in new economic data.

Notably, the 10-year Treasury yield, which often influences mortgage rates, has risen by about 0.14 percentage point since last Thursday as investors evaluate recent data and minutes from the Federal Open Market Committee's December meeting.

With more data releases on the horizon, such as government employment data on Friday and December's Consumer Price Index reading set for next Thursday, there is potential for further impact on mortgage rates. Positive economic reports could push the 10-year yield higher and elevate mortgage rates, while weaker data may result in a decrease in the average mortgage rate.

Looking ahead, Freddie Mac foresees mortgage rates continuing to decline in 2024 due to anticipated Federal Reserve rate cuts. However, buyers still face the challenges of low inventory and rising home prices, which are expected to persist.