Despite a dip for the third consecutive week, mortgage rates are still above 6.5%—a
key affordability threshold—and remain much higher than they were just two years
ago. Freddie Mac reports that the 30-year fixed-rate mortgage averaged 6.67% last
week. A year ago, rates averaged 5.81%, and in early 2021, they were in the 2% range.
The dramatic change in rates has created a mortgage rate lock-in effect, in which
homeowners are reluctant to trade in their current ultra-low mortgage rate for a
higher one—especially at today’s higher home prices. These would-be sellers are
partially the reason housing inventory levels remain so low. The vast majority of
homeowners locked in low rates during the pandemic and aren’t particularly excited
to give them up in order to buy a new home, unless they really need to move for
personal reasons.
The housing market has really seen a double whammy in 2023, with a retrenchment in
the number of homes for sale coupled with still-high prices and mortgage rates that
have kept both first-time and repeat buyers on the sidelines.
Potential home buyers are watching rates closely to decide when to make their move.
However, inventory challenges persist as the number of existing homes for sale
remains very low. Though, a recent rebound in single-family housing starts is an
encouraging development that will hopefully extend through the summer.
Call me today to find your dream home.