Mortgage Rates Are Falling, but Not Enough to Motivate Cautious Buyers
Mortgage rates may be stabilizing, but they still aren't low enough to bring stalled buyers back into the for-sale market
June 27, 2023
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Even after falling for a third consecutive week, mortgage rates remain above 6.5%, a key affordability threshold for homebuyers on the fence. In addition to dissuading prospective buyers, higher borrowing costs are also stalling a growing share of would-be sellers opting not to relocate and refinance.
As a result, the number of existing homes for sale remains historically low, and without a rebound in for-sale supply, high home prices will act as an additional deterrent for budget-conscious buyers, the National Association of Realtors reports.
Potential home buyers are watching rates closely to decide when to make their move, says Sam Khater, Freddie Mac’s chief economist. “However, inventory challenges persist as the number of existing homes for sale remains very low,” Khater says. “Though, a recent rebound in single-family housing starts is an encouraging development that will hopefully extend through the summer.” New data this week shows construction of single-family homes reached an 11-month high in May.
