With Recent Rate Drop, Will Sales Grow?

In the second week of December 2018, interest rates fell to the lowest level since September, easing borrowing costs, and offering the market a "useful test case" for buyer demand.

The average rate for a 30-year fixed mortgage loan dropped to 4.63 percent through December 13, 2018, the lowest level since early September 2018, per Freddie Mac data. The previous month, rates hit a 7-year high at 4.94 percent, and at the outset of 2018, the average rate for this loan product was about 4 percent. Bloomberg's Prashant Gopal writes that buyers have been easing off the market as affordability constricts further, but the new dip in rates may offer an opportunity to borrow, Yahoo Finance reports.

“It’s a useful test case for housing demand,” said Robert Dietz, the National Association of Home Builders’ chief economist. “We should see some stabilization in the pace of sales. The concern would be if we don’t -- then other factors are at play.” If sales don’t improve in coming months, buyers might be losing confidence in the economy, he said. On the other hand, if demand increases, it’s likely to be temporary. Rates for 30-year loans will reach 5.25 percent by the end of next year, Dietz projects.

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