Mortgage Rates Tick Up to 6.49% but Are Predicted To ‘Trend Down’ This Fall

Mortgage rates inched up, with the average rate for a 30-year fixed home loan going from 6.47% last week to 6.49% for the week ending Aug. 15, according to Freddie Mac.

“While rates increased slightly this week, they remain more than half a percent lower than the same time last year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “In 2023, the 30-year fixed-rate mortgage nearly hit 8 percent, slamming the brakes on the housing market. Now, the 30-year fixed-rate hovers around 6.5 percent and will likely trend down in the coming months as inflation continues to slow.”

Last week, rates fell to their lowest level in over a year, and as a result, the housing market continued to move toward a more buyer-friendly direction, according to Realtor.com® economist Jiayi Xu in a recent analysis.

Despite this week’s uptick, the overall seismic shift in what have been stubbornly high rates may make the autumn housing market busier than the usually bustling summer market.

“This fall may see an extra boost from shifting housing conditions,” says Realtor.com senior economic research analyst Hannah Jones.

What other changes are coming down the pike? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in the latest installment of our “Weekly Housing Market Update.”

Mortgage rate forecast

In a welcome glimmer of good news, the latest consumer price index data reported the lowest level of inflation since 2021. (The CPI is a measure that examines the average change in prices over time that consumers pay for various goods and services, indicating inflation levels.)

This sign of economic stability provided more reassurance that the Federal Reserve will make “potential rate cuts in September and December, which should help put mortgage rates lower for the rest of the year,” says Xu. (While the Fed doesn’t set mortgage rates, Fed rates and mortgage rates tend to move in the same direction.)

After crunching all the latest economic data, Realtor.com economists predict rates will fall to 6.3% by the end of 2024—welcome news for weary buyers.

Whether sellers will be motivated to list their homes remains to be seen as 86% of homeowners in America still have mortgage rates below 6%.

“Rates will need to continue to trend lower to see a fully reenergized housing market,” says Jones.

Home prices continue to fall

Homebuyers have another number heading south to celebrate along with mortgage rates: a drop in list prices.

Median list prices fell 0.2% year over year for the week ending Aug. 10, marking 29 consecutive weeks of annual price growth below 1%. (In July, the national median list price was $439,950.)

The dip in list prices can be chalked up to the mix of homes for sale shifting toward smaller homes. So while buyers will pay less, they will also simply get less square footage to live in.

However, it’s important to note that what homes list for is somewhat different from sale prices, which have risen at a faster clip. Indeed, sale prices hit 4.1% in June, according to the National Association of Realtors®.

The rise in sale prices was due to actual sales shifting “toward more expensive, and likely larger, homes,” says Xu.

The number of homes for sale spiked

The total number of houses for sale increased by 35.5% for the week ending Aug. 10, marking a 40-week streak of growing for-sale homes compared with the same time last year.

Housing stock has trended higher on an annual basis over the past nine months, suggesting “that housing conditions are set to improve, especially on the heels of the recent downward mortgage rate trend,” says Jones.

As far as what fall buyers can expect, the Realtor.com Housing Forecast predicts the total number of houses for sale will climb by 14.5% annually in 2024.

In the meantime, fresh listings new to the market dipped by 2.2% for the week ending Aug. 10 year over year.

The mortgage rate lock-in effect continues to keep potential sellers out of the market, says Xu, while “concerns about a possible recession and big stock volatility may cause sellers who are also buyers to delay their plans and wait for more stability.”

The pace of the market slows

Homes spent five days more on the market for the week ending Aug. 10 compared with the same time in 2023. (The typical home spent 50 days on the market in July.)

This was the 14th straight week that the time a home spent on the market was longer than at the same time a year ago.

“Homebuyers this year may continue to contend with high prices and mortgage rates, but they’re starting to get some time back on their side compared to last year,” says Xu.