It’s been a challenging year so far for prospective home buyers, but Friday offered a glimmer of hope.Â
According to Mortgage News Daily, the average 30-year fixed mortgage rate dropped 22 basis points to 6.4%, while the 15-year fixed rate fell to 5.89%. They are the lowest levels since April 2023, and May 2023, respectively.
Mortgage rates have a substantial impact on how much home-owners end up paying each month. With home prices surging in many states, interest rates can make or break a prospective buyer’s plans.
“Between [Federal Reserve Chairman Jerome] Powell’s equivocal openness to “multiple cuts” in 2024 on Wednesday and this morning’s sharply weaker jobs report (something Powell didn’t even know about on Wednesday), the more aggressive rate cut narrative is quickly coming into focus,” Matthew Graham, chief operating officer at Mortgage News Daily, wrote in a news update.
Mortgage rates shift daily, following the economy—things like inflation and job growth. But while falling rates are good for house-hunters, it can actually be a sign that the economy is worsening. And weaker-than-expected monthly employment report were also released Friday.
Data from the U.S. Bureau of Labor Statistics (BLS) shows an addition of 114,000 jobs in July, which was below both analyst’s expectations, as well as below the average of monthly gain over the past year (215,000 jobs). The unemployment rate has risen for three consecutive months, as well, which experts say has historically been a sign of a recession.
In addition to the cooling mortgage rate, home prices have also taken a long-coming dip, too. The national median list price went from $445,000 in June to $439,950 in July, per a report by Realtor.com. However, that’s in contrast to the housing supply, which increased by 36.6%.
Mortgage applications, which have been down by about 15% from last year, according to the Mortgage Bankers Association, could finally start trending upward. With far more houses on the market than are being bought up, that would be welcomed news for the sellers of 2024.
