The standard, 30-year fixed-rate mortgage averaged 6.20% in the week ended September 12, mortgage financing giant Freddie Mac said Thursday. That’s down from last week’s 6.35% and well below the two-decade high of 7.79% in October 2023.
This drop was influenced by the expectation that the Federal Reserve is finally going to drop interest rates during this month.
“Mortgage rates have fallen more than half a percent over the last six weeks and are at their lowest level since February 2023,” Sam Khater, Freddie Mac’s chief economist, said in a release. “Rates continue to soften due to incoming economic data that is more sedate. But despite the improving mortgage rate environment, prospective buyers remain on the sidelines, as they negotiate a combination of high house prices and persistent supply shortages.”
Supply is simply not keeping up with demand in many markets across the country, for varying reasons. That includes construction costs, complicated zoning laws, not enough land available for development and, in some cases, shortages of workers for home construction.
Many current homeowners are choosing to remain in their homes due to the fact that the mortgage rate they locked in is lower than the current rate, adding to the market supply shortage.
There have been some steps in the right direction this year, however. Total housing inventory has improved every month this year, according to data from the National Association of Realtors. But that’s still not enough to keep up with demand.
Whether it’s single family homes, ADUs or multi-unit mid-range developments, much more construction is needed. This will require cooperation as well as changes in regulations and attitudes at state, county, city and neighborhood levels.
Related to the topic of local/neighborhood attitudes regarding housing solutions, take the NIMBY quiz (NotInMyBackYard) to see where you might stand on more housing in YOUR neighborhood: https://flo.uri.sh/visualisation/14410394/embed