(The hill) – Mortgage rates saw their biggest weekly decline in nearly 40 years this week, easing monthly payments for potential buyers.
The 30-year fixed rate fell to 6.61%, down nearly half a percentage point from the previous week after a report showed weaker-than-expected inflation.
This historic drop could save buyers more than $100 per month, according to an analysis of the real estate company Redfin.
Now, the typical monthly mortgage payment in the United States is $2,430, down from $2,542 previously.
But Redfin’s deputy chief economist, Taylor Marr, warned the overall impact could be muted without a steady decline in inflation.
Nonetheless, buyers who need a home will benefit from lower rates.
“Serious buyers who need to buy a home as soon as possible can feel good about jumping on a house this week, knowing it could cost them up to $100 less per month than what the same house if they had signed the deal a week earlier,” Marr said.
“More casual buyers may want to wait a few more months, as there is reason to be cautiously optimistic that the worst of inflation and high rates are behind us, and monthly payments could fall further. ”
The Federal Reserve’s aggressive efforts to tackle persistent inflation through a series of massive interest rate hikes have had a severe impact on the housing market. Since the Fed issued its first interest rate hike in March, mortgage rates have jumped 4.16%.
These rising rates, combined with persistently high prices, have pushed many Americans out of the housing market, especially first-time buyers.
The Fed’s actions also had an impact on builders, leading to a decline in builder confidence and a sharp drop in new home construction.
Housing starts fell 4.2% from September to 1.43 million units, according to Census Bureau data released Thursday.
Meanwhile, data released Wednesday by the National Association of Home Builders (NAHB) revealed that home builders confidence in the market for newly built single-family homes is at an all-time low.
“Rising interest rates have significantly weakened demand for new homes as buyer traffic becomes increasingly scarce,” NAHB President Jerry Konter said in a press release.
But the NAHB/Wells Fargo Housing Market Index found homebuilders were looking for ways to encourage more buyers to enter the market, with 37% saying they had cut prices. Overall, 59% of homebuilders reported using some kind of incentive.
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