4 MIN READ
Published July 17, 2024
Mortgage rates are continuing their downward trend, driven by favorable economic indicators and cooling inflation. According to HousingWire’s Mortgage Rates Center, the average 30-year conforming loan rate decreased to 7.06% from 7.11% last week, while the 15-year conforming loan rate fell from 6.90% to 6.79%
Inflation Data and Federal Reserve Outlook
Recent Consumer Price Index (CPI) data revealed a 0.1% decline in prices for goods and services from May to June, marking the slowest annual growth rate in over three years at 3%.
Federal Reserve Chair Jerome Powell's remarks at a Washington, D.C. event further bolstered optimism. Powell indicated that policymakers might cut benchmark rates before inflation reaches the 2% target, stating, “If you wait until inflation gets all the way down to 2%, you’ve probably waited too long.”
Market Predictions and Analyst Insights
The CME Group’s FedWatch tool shows a 93% chance that rates will remain unchanged after the Fed’s July meeting, with analysts unanimously predicting a cut in September. HousingWire Lead Analyst Logan Mohtashami predicts mortgage rates could drop to 6% if the 10-year Treasury yield continues to decrease.
Mohtashami noted, “The last time we saw 12 weeks of positive trending purchase app growth was when mortgage rates reached 6%. Purchase apps have been positive for four out of the last five weeks and mortgage rates aren’t even near 6%.”
Housing Market Trends
Despite mortgage rates hovering above 7% throughout 2024, home-price growth has slowed, and supply has increased. First American reported a 5.6% year-over-year growth in U.S. home prices in June, with Anaheim, California, leading at 10.2%. Other notable metro areas include Miami (8.9%), Pittsburgh (6.5%), Las Vegas (6.4%), and San Diego (6.2%).
Mark Fleming, chief economist for First American, commented, “Elevated mortgage rates continue to keep homeowners rate locked-in, while reducing affordability for potential first-time home buyers. The resulting pullback in demand coincided with an uptick in supply, which is cooling price growth.”
Current Housing Supply
Altos Research data shows a slight decrease in the supply of single-family homes for sale to 651,000, a 38.5% increase year-over-year but still 32% below July 2019 levels. The share of listings with a price cut has risen to 38.3%. Mike Simonsen, president of Altos Research, remarked, “If we get lucky and mortgage rates ease from here on out for the rest of the year, then one place we’ll measure a rebound in demand will be fewer price cuts.”
To Conclude…
The combination of cooling inflation, positive economic trends, and potential Federal Reserve rate cuts is contributing to the decline in mortgage rates. This presents a mixed outlook for the housing market, with some areas experiencing price growth while others see an increase in supply. As the year progresses, these trends will be crucial in determining the direction of mortgage rates and housing market stability.