Another dip in borrowing costs is giving a lift to the U.S. housing market during its busiest time of the year.
The 30-year, fixed-rate mortgage averaged 6.62% as of Thursday, down from 6.64% last week and from 6.88% in the same week of 2024, according to Freddie Mac, a buyer of loans from banks. It was the 12th consecutive week the 30-year average fell below 7%.
The 15-year fixed-rate mortgage average of 5.82% was unchanged from last week and down from 6.16% at this time last year, according to the mortgage giant.
The drop in rates is motivating buyers to jump into the market. Applications for home loans and mortgage refinances increased 20% in the week ended April 4 compared to the previous week, according to the Mortgage Bankers Association.
“As purchase applications continue to climb, the spring homebuying season is shaping up to look more favorable than last year,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Spring is prime time for housing sales as families look to buy homes and get settled before the next school year. KB Home and Lennar cut prices in some markets after saying spring sales started slowly, but analysts said there's reason for optimism.
"The green shoots of spring home buying have emerged," said Odeta Kushi, deputy chief economist at First American, a title insurance and settlement services firm, in an email. "During times of economic uncertainty, there's often a flight to the safety of U.S. Treasury bonds, which can lower long-term bond yields and subsequently mortgage rates, boosting housing affordability. This spring, as new listings increase and supply grows, improved affordability could stimulate more demand."
An upbeat report on inflation earlier Thursday is also favorable for the housing market, according to Sean Salter, a real estate researcher and finance professor at Middle Tennessee State University in Murfreesboro.
"That opens the door for the Federal Reserve to cut interest rates and move mortgage rates even lower," Salter said in an interview. "I don't think this will move the entire market, but clearly there are folks on the bubble starting to make a call."
Late last month, the Fannie Mae Economic and Strategic Research Group predicted rates are likely to fall further into the low 6% range to end this year and next.
