Mortgage rates rose just 1 basis point to 2.87% in this week’s data from Freddie Mac, marking the third week in a row of relative steadiness. With the stock market hitting new highs and investors continuing to digest the July Fed meeting minutes while they await Chair Powell’s Friday speech, there were no major surprises that would spark a big move.
What Does this Mean:
Data on both existing home sales and new home sales in July showed that the housing market performed largely as expected, with a slight pick-up in the month but momentum notably down from last winter’s peak activity. The number of homes for sale remains low despite recent inventory improvements and home prices continue to go up, albeit at a slowing pace. Investors are waiting for a reason to go in a new direction and while we may get this from Fed Chair Powell’s speech on Friday, it’s more likely that incoming data this fall will be what causes rates to move. Rates will begin to climb if we make continued progress in fighting the pandemic which would suggest that the economy will remain on track, and while less likely, rates could falter if COVID cases continue to increase.
For homebuyers, while the mortgage rate backdrop is important, the bigger challenge remains finding a home amid scarce options. A steady climb in homeowners deciding to sell will spell welcome relief and will likely enable more buyers to take advantage of still low mortgage rates. While we saw a smaller gain in new listings this week as students head back to school nationwide, we expect this setback to be temporary, meaning improved options for homebuyers in the months ahead.
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