Mortgage Rates Decline for a Third Straight Week

“Many newly elected representatives have expressed frustration with the conflict in the Middle East, which has helped push inflation higher, so any progress toward a resolution could eventually lead to lower inflation and more favorable mortgage rates,” said Realtor.com Senior Economist Hannah Jones.

Mortgage rates fell for a third consecutive week, although it is still unclear whether the recent drop will continue. Economists say progress toward a settlement in the Middle East would be a step in the right direction.

The newest Freddie Mac Primary Mortgage Market Survey released Thursday put the average rate on a 30-year fixed mortgage at 7.18%, down six basis points from 7.24% a week earlier. That figure is still above the 6.22% average from a year ago. The 15-year fixed-rate mortgage averaged 6.57%, down from 6.60% the previous week, compared with 5.50% a year earlier.

By Thursday afternoon, Mortgage News Daily showed an average rate of 7.17%, roughly one percentage point higher than a year ago.

Jones said the latest Job Openings and Labor Turnover Survey came in stronger than expected, with layoffs slipping slightly and job openings rising sharply, suggesting a potentially solid jobs report could follow.

“While steady hiring supports housing demand over time, a stronger-than-expected report could also push bond yields higher and slow the pace of rate declines in the near term,” she said.

On the midterm elections that gave Democrats control of both the House and Senate, Jones said it remains unclear whether the political shift will have an immediate effect on housing.

“Many newly elected representatives have voiced discontent with the ongoing conflict in the Middle East, which has contributed to rising inflation, so any progress toward resolution could mean lower inflation and softer mortgage rates ahead,” she said.

Even with rates easing in recent weeks, they remain above 7%, keeping many buyers on the sidelines. Realtor.com’s October housing market report pointed to another month of slowdown, with both buyers and sellers pulling back. Pending sales fell 10.5% from a year earlier, while new-home sales dropped 0.6% on a monthly basis in September, which Realtor.com Senior Economist Joel Berner described as muted for the year.

“Still, sellers aren’t delisting in large numbers, which suggests they are stepping back rather than acting out of distress,” Jones added. “With 43% of active listings seeing a price cut, buyers who can afford to move ahead are in a relatively strong position, facing less competition and more markdowns.”