Soaring Home Construction Costs and Mortgage Rates Update

FOX Business reporter Jeff Flock recently appeared on Varney & Co. to discuss how mandatory electric vehicle (EV) wiring, roofs designed for solar panels, and stricter insulation rules are driving up home construction expenses.

On Thursday, mortgage buyer Freddie Mac reported an increase in stock prices this week. In its latest Primary Mortgage Market Study, Freddie Mac indicated that average interest rates for 30-year fixed mortgages rose slightly from 6.19% to 6.22%. To put it in perspective, this time last year, the average stood at 6.6%.

“Average rates for 30-year fixed mortgages are considerably lower than the year-to-date average of 6.62%, which offers some balance in the housing market,” noted Sam Cater, Freddie Mac’s chief economist.

Turning to other figures, the average interest rate for a 15-year fixed mortgage increased to 5.54%, up from 5.49% the previous week.

In a related development, the Federal Reserve recently cut rates for the third time, amid ongoing uncertainty regarding the labor market and inflation. The latest data revealed that the benchmark interest rate was lowered by 25 basis points, setting a new range between 3.5% and 3.75%. This follows cuts made in September and October.

Although mortgage rates don’t change directly with the Fed’s interest rate adjustments, there remains a close correlation with the 10-year Treasury yield, which was around 4.15% late Thursday afternoon.

Jeff Dergrahian, chief investment officer at LoanDepot, mentioned that with the meeting concluded, market focus will shift to upcoming labor data. “If it aligns with the Fed’s view—indicating a weak labor force and controlled inflation—it might lead to lower mortgage rates extending into 2026,” he suggested.