Key Takeaways
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- The 30-year mortgage rate dropped 15 basis points to 6.49% in the week ending Sept. 5, reaching an 11-month low.
- Rates on 15-year mortgages and 5-year adjustable-rate mortgages also fell to their lowest levels in about a year.
- Mortgage activity, including home purchases and refinancing, surged to a three-year high.
- Lower financing costs could provide much-needed support to the housing market, which has been a drag on GDP in recent quarters.
- The 10-year Treasury yield declined sharply, influenced by a weak August jobs report and expectations of upcoming Federal Reserve rate cuts.
- Home-purchase applications rose 6.6%, and refinancing applications increased over 12%, both reaching multi-year highs.
- Home prices are cooling, with the national price gauge rising just 1.9% year-over-year in June, the smallest increase since 2023.
- Housing inventory is improving, with existing home listings at a five-year high and new completed homes for sale at a 16-year high.
What Happened?
Mortgage rates fell to their lowest levels in nearly a year, sparking increased refinancing and home-buying activity. This trend is driven by declining Treasury yields and market expectations of Federal Reserve interest rate cuts. The improved affordability and growing inventory are encouraging more buyers to enter the market.
Why It Matters?
The housing market is a critical component of the U.S. economy, and renewed activity could help stabilize economic growth. Lower mortgage rates reduce borrowing costs, potentially boosting construction, home sales, and related sectors. Investors should watch housing data as an indicator of consumer confidence and economic momentum.
What’s Next?
Monitor mortgage rates, home sales, and construction data for signs of sustained recovery. Watch Federal Reserve policy decisions and Treasury yields for their impact on financing costs. Investors should consider exposure to housing-related industries and consumer spending trends.
