Mortgage Rates Drop to 7-week low: 6.43%

What happened to mortgage rates this week?

The Freddie Mac 30-year fixed mortgage rate ticked down 6 basis points to 6.43%. For most of Freddie’s survey window, yields sat near their lowest levels since early May as oil prices kept retreating and Iran ceasefire talks progressed, which helped this week’s average to land below last week’s mark. This is the lowest mortgage rate since mid-May. However, the 10-year Treasury yield jumped more than 6 basis points on Tuesday to a two-week high following a stronger-than-expected job openings report, and has only partly retreated on a weaker than expected jobs report.

The Fed has held rates steady since December, but has turned notably more hawkish this year as new Chair Kevin Warsh and the Committee react to higher inflation. Taken together, the recent jobs data likely won’t shift the hawkish stance, but could help yields settle back toward lower levels from the late-week surge that was largely not captured in today’s data.

What does this mean for the housing market?

Housing data released this week suggests buyers and sellers are adapting to the current rate environment rather than waiting it out. The Realtor.com June housing report found listing prices down 2.5% year over year, the steepest annual decline in the data series since 2017, while pending sales grew for a seventh straight month. While April’s Case-Shiller index still shows nominal price growth, it trailed inflation for an eleventh straight month, meaning that even as sticker prices rise, the real price of a home for buyers is going down relative to other goods and services. Also of note, wide regional differences persist with a nearly nine-point gap between the strongest price-growth metro (Chicago) and the weakest (Seattle).

That regional unevenness is also the backdrop for a new look at 250 years of federal housing policy, released by Realtor.com as the country marks its semiquincentennial. Today’s roughly 65% homeownership rate didn’t happen by accident. It’s a product of a century of federal interventions, from the FHA’s mortgage insurance in the 1930s to the G.I. Bill and the postwar expansion of the 30-year loan. Congress just added another chapter: the 21st Century ROAD to Housing Act, passed in late June and now awaiting the president’s signature, aims to boost supply and rein in institutional buyers. It’s no quick fix for the affordability gap, but it’s a step in the right direction. It’s worth remembering now, as buyers and sellers navigate still-elevated rates and home prices largely on their own in the meantime.