WASHINGTON—Mortgage rates dropped to their lowest level in more than a year after the 10-year Treasury yield fell below 4%, spurring a spike in new mortgage applications.
According to Freddie Mac, the average 30-year mortgage rate was 6.19% through Oct. 22, down from 6.27% a week earlier. Average 15-year mortgage rates were 5.44%, down from 5.52%.
The 10-year Treasury yield, which mortgage rates closely track, dropped below 4% and stayed there this week.
As the CU Daily has also reported, mortgage rates have been moving lower in anticipation of another reduction in the Fed funds rate when the FOMC meets next week, as well as market forecasts predicting additional cuts will follow.
Pricing In Cuts
“I think the mortgage market is trying to price in further Federal Reserve rate cuts in the coming months,” Lawrence Yun, chief economist at the National Association of Realtors, said in a statement.
Home Sales Rise
Meanwhile, sales of previously owned homes rose 1.5% in September from August to a seasonally adjusted annual rate of 4.06 million units, according to the National Association of Realtors. Sales were 4.1% higher compared with September of last year.
On a regional annual basis, sales were strongest in the South and Northeast. From August, sales were strongest in the West and fell slightly in the Midwest—the only region to see a monthly decline, the data show.
Analysts noted that count is based on closings, so people signed contracts likely in July and August when mortgage rates were coming down but not yet as low as they are now.
Inventory Gains
Inventory continued to make gains, up 14% from a year ago to 1.55 million units for sale at the end of September. That remains lean historically. At the current sales pace, there is a 4.6-month supply of homes for sale, the NAR said.
In addition, NAR data show buyer activity softened slightly in September, with newly pending sales down 5.4% from August but up 6.4% year over year. Homes went under contract in a median of 27 days, six days longer than last year. Price cuts affected 26.2% of listings, while 26.9% of homes sold above list price.
Additional Data Points
Meanwhile, the typical U.S. home value in September stood at $364,891, with a monthly mortgage payment of $1,812 assuming a 20% down payment, Zillow reported.
The Zillow data further show:
• Home values declined in 47 of the 50 largest metro areas, with the steepest monthly drops in Austin (-1%), Pittsburgh (-0.8%) and Dallas (-0.6%). Only New York (0.2%) and Salt Lake City (0.1%) posted modest gains.
• Compared with last year, prices rose in 26 metros, led by Cleveland (4.6%) and Hartford (4.1%), while 24 metros saw annual declines, most notably Tampa (-6.4%) and Austin (-6%).
