Rates are trending down, buyers are ready for the spring market, but with the same, persistent inventory challenges, sellers in many markets still have the upper hand. That’s the consensus of industry economists following the release of the latest mortgage rate numbers.
The 30-year fixed-rate mortgage (FRM) averaged 6.28% this week, down from 6.32% last week, according to the latest Primary Mortgage Market Survey® (PMMS®) released by Freddie Mac Thursday.
This week’s numbers:
- 30-year fixed-rate mortgage averaged 6.28% as of April 6, 2023, down from last week when it averaged 6.32%. A year ago at this time, the 30-year FRM averaged 4.72%.
- 15-year fixed-rate mortgage averaged 5.64%, up from last week when it averaged 5.56%. A year ago at this time, the 15-year FRM averaged 3.91%.
What the experts think:
“Mortgage rates continue to trend down entering the traditional spring homebuying season,” said Sam Khater, Freddie Mac’s chief economist. “Unfortunately, those in the market to buy are facing a number of challenges, not the least of which is the low inventory of homes for sale, especially for aspiring first-time homebuyers.”
Bright MLS Chief Economist Dr. Lisa Sturtevant commented:
“Economic uncertainty, cooling labor market conditions, and lower-than-expected consumer expenditures helped push mortgage rates to their lowest level in two months. Lower rates and price declines in some markets may be giving some buyers hope, but those improvements are offset by other factors that will continue to make homebuying challenging.
“First, there are few new listings coming onto the market, which means that buyers are still competing over very low inventory. Buyers may have some leverage on price this spring, but in this tight inventory environment, sellers in most markets still have the upper hand.
“Second, while rates are falling, lending requirements may also be tightening. The recent banking crises have made some financial institutions wary, leading to more caution in lending. It’s possible that some borrowers with less-than-excellent credit may have a harder time securing a mortgage.
“Finally, despite falling for the past four weeks, rates are still higher than they were a year ago at this time. Rates had started rising last spring, but in early April, the average rate on a 30-year fixed-rate mortgage was 4.72%. Higher rates this year add nearly $500 to the monthly payment on the median-priced home.”
Realtor.com Economic Data Analyst Hannah Jones commented:
“The Freddie Mac fixed rate for a 30-year mortgage ticked down 4 basis points, reaching 6.28% this week as 10-year treasury yields fell to the lowest level since September. Investors are preparing for Friday’s jobs report, anticipating signs of a slowing economy in light of February’s Job Openings and Labor Turnover report, which showed falling job openings. As markets prepared for news of a slowing economy, demand for bonds increased, resulting in lower yields. The 10-year treasury yield fell into the low 3.3% range mid-week and mortgage rates also tracked lower.
“Mortgage rates are approaching February’s lows as the market enters the spring, when housing demand typically climbs. Buyer demand tends to be sensitive to mortgage rate changes, increasing with each downward tick in rates, as evidenced in February’s Pending Home Sales data. We can expect to see a similar bump in housing activity as a result of the recent drop in mortgage rates. Despite these pick ups in demand, by and large, the housing market remains unaffordable for many would-be buyers. Though sale prices softened, listing prices remained 6.3% above last year’s level in March which, accompanied by higher mortgage rates, meant that prospective buyers were looking at a home payment roughly 26.2% higher than a year ago.
“This spring season is positioned to look different from the white-hot springs of 2021 and 2022. The current market is seeing lower demand and fewer fresh listings as buyers and sellers weigh whether to dip a toe in or wait until conditions improve. Each gain in affordability is accompanied by new buyer activity and while buyers and seller’s can’t control mortgage rates, lower home prices can drum up demand by making a home purchase more feasible. As those buyers who are still in the market look for well-priced new listings, sellers can ensure attention by getting to know their local market and listing a well-maintained home for an attractive price. This year’s Best Time to Sell is approaching, as the week of April 16-22 is historically the best week of the year to list, and provides the best combination of conditions for a quick sale at an above-average price.”
