Mortgage rates add to recession woes
Housing demand continues to fall
U.S. mortgage rates dipped again after climbing the past two weeks, signaling recession jitters are taking a toll on investors and buyers alike as the housing market continues to cool.
Freddie Mac's latest Primary Mortgage Market Survey released Thursday shows the average rate for a 30-year fixed-rate mortgage is now at 5.3%, down 5.54% from last week but up from 2.8% a year ago.
A "For Sale" sign outside a house in Albany, California, US, on Tuesday, May 31, 2022. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
The average for a 15-year fixed-rate note also fell, dropping to 4.58% from 4.75%. The same week in 2021, the 15-year rate was at 2.1%.
The declines come as investors sought a safe haven in U.S. Treasurys amid building recession fears ahead of Thursday's gross domestic product report confirming a second straight quarter of contraction in the economy.
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While lower mortgage rates are a welcome sign to potential home buyers, rates remain elevated and demand in the housing market continues to plummet amid sky-high home prices and four-decade-high inflation eating away at Americans' budgets.
Pending home sales declined 20% year-over-year in June. (REUTERS/Mike Blake / Reuters Photos)
The National Association of Realtors reported Wednesday that its pending home sales index tanked 8.6% in June from the prior month, down 20% from June 2021.
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"Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk, and declining consumer confidence take a toll on homebuyers," said Sam Khater, Freddie Mac’s chief economist.
A man walks past open house signs in front of condominiums for sale in Santa Monica, California (Reuters/Lucy Nicholson / Reuters Photos)
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"It’s clear that over the past two years, the combination of the pandemic, record low mortgage rates, and the opportunity to work remotely spurred greater demand," Khater said. "Now, as the market adjusts to a higher rate environment, we are seeing a period of deflated sales activity until the market normalizes."
FOX Business' Megan Henney contributed to this report.