Mortgage fees continued to decline. (ISTOCK))
There is good news for potential home buyers. The mortgage rate continued to decline this week. January, The rate reached 7.04%the highest level since last May. However, this week, 30-year interest rates fell to 6.76% on fixed-rate mortgages. According to Freddie Mac.
“Mortgage rates fell to their lowest levels this week after two months or more,” said Sam Carter, chief economist at Freddie Mac. “A drop in mortgage rates, combined with slight improvements in inventory, is a encouragement for market consumers to buy a home.”
Last week, the 30-year mortgage rate averaged 6.85%, so this week's fall in prices is somewhat important. Mortgage fees for 15 years also fell from a fixed rate of 6.04% to 5.94%.
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Home prices are falling in some areas
Home prices have fallen in many areas, but they are not yet close to pre-pandemic prices. Approximately 23% of sellers lowered their listing prices in January, Zillow found.
“The effect of rate locking over time is that homeowners are finally back in the market, but buyers still suffer from high costs each month,” said Zillow Chief Economist Skylar Olsen.
“Sellers are in a good position and are willing to cut prices to close the deal,” Olsen said. “Home equity is close to record highs, with the general economy and financial markets being surprisingly strong. Homes are selling faster than before the pandemic.”
Housing values are still up 44% compared to before the pandemic, up 2.6% from last year. Despite high home prices and stubborn buyers, more sellers are on the market as the “rate lock” effect is beginning to fade.
The new list rose nearly 12% year-on-year in January. Sellers seem tired of waiting for the rate to break, listing their homes according to various life events. Zillow found that 78% of sellers are affected by events such as new jobs and changes in family size.
Many of these sellers still get more than they originally listed their homes. Almost 25% of homes sold in December last year were sold at more than their original listing prices. This is higher than 19% of homes before the pandemic.
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Rentals are still more affordable than home buying in most places
Despite the rising rental costs, rents are still cheaper than owning a home. Realtor.com Report.
Pittsburgh and Detroit are the only two metros with low average listing prices and are two of the most affordable cities to buy. The average price in Pittsburgh is $229,700, and in Detroit it is $239,950. With rents rising in both these cities, it may be cheaper to buy a home in the long run.
“For most Americans, owning a home is still a big part of the American dream, but all rentals, except two of the 50 largest markets, are a key consideration,” said Daniel Hale, Chief Economist at Realtor.com. “This relative cost advantage is one reason why we expect an increase in renter households and lower homeownership rates in 2025.”
Rentals may be cheaper than owning, but even though rents are technically generally down nationwide, rents still remain high. Rent costs in January 2025 are lower than in 2024 and 2023, but have surpassed rent prices at $257 from January 2020, Realtor.com found.
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