Mortgage rates fell for the ninth week in a row amid signs that the Federal Reserve could cut interest rates next year.
The average 30-year fixed-rate mortgage rate fell to 6.61 percent as of Thursday, down from 6.67 percent the previous week, according to data released Thursday by Freddie Mac.
Mortgage rates dipped below 7 percent in mid-December for the first time since August after the Federal Reserve forecasted rate cuts next year.
“The rapid descent of mortgage rates over the last two months stabilized a bit this week, but rates continue to trend down,” said Sam Khater, Freddie Mac’s chief economist, in a statement.
“Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market.”
The latest figure is still above last year’s average 30-year fixed-rate mortgage rate of 6.42 percent, but the downward trend is a welcome sign for homebuyers who have weathered a dismal housing market.
A recent analysis by Redfin found the typical American household could afford just 15.5 percent of the homes for sale in 2023, meaning monthly mortgage payments would not exceed 30 percent of the county’s median income.
The share of affordable housing hit a record low this year, according to the real estate group, which expects those numbers to improve as mortgage rates continue to fall and more homes go on the market.
“Many of the factors that made 2023 the least affordable year for homebuying on record are easing,” said Redfin senior economist Elijah de la Campa in a statement.
“Mortgage rates are under 7% for the first time in months, home price growth is slowing as lower rates prompt more people to list their homes, and overall inflation continues to cool. We’ll likely see a jump in home purchases in the new year as buyers take advantage of lower mortgage rates and more listings after the holidays.”