Rate cut will further "juice up" sluggish house market
US national mortgage rates have dropped to a new low, as the whole country waits for the US Federal Bank to announce another round of rate cuts this September.
Citing data from Freddie Mac, a Bloomberg report noted that the average for a 30-year, fixed loan was 6.46%, down from 6.49% last week.
“Borrowing costs are down significantly after topping 7% earlier this year, giving house hunters more purchasing power and coaxing some would-be buyers off the fence,” the report said.
Sales of previously owned US homes increased in July for the first time in five months, according to the latest data from the National Association of Realtors (NAR). However, notwithstanding the 1.3% gain from July, the sales pace was the weakest for any July since 2010 since high prices and a shortage of affordable listings are still keeping deals out of reach for many Americans, the report noted.
“Buyers and sellers also may be holding off on decisions until financing costs fall further,” the Bloomberg report explained.
Meanwhile, Freddie Mac’s chief economist Sam Khater admitted that current house pricing is not attractive to house buyers.
“Earlier this month, rates plunged and are now lingering just under 6.5%, which has not been enough to motivate potential homebuyers,” Khater told Bloomberg. “We expect rates likely will need to decline another percentage point to generate buyer demand.”
In the meantime, house experts are expecting the Fed’s possible announcement of a rate cut this September to pump up the sluggish housing market.
Realtor.com economist Jiayi Xu told Bloomberg that while cooling inflation had bolstered the case for a first rate cut next month, the timing and extent of future moves would also depend on the health of the labor market.
“Policymakers are aiming to time the cuts carefully without triggering a sharp increase in unemployment,” she explained.
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