Key facts
- Average 30-year conventional mortgage rates fell to 6.73% this week.
- Jumbo and FHA loan rates also decreased.
- Purchase and refinance loan applications show year-over-year growth.
- The Federal Reserve is projected to raise interest rates in 2026.
- National home price appreciation remains subdued, but local markets show divergence.
- A growing number of sellers may face capital gains taxes on home sales.
Mortgage rates have seen a decline this week, offering a temporary relief to the housing market after recent upward trends. The average rate for a 30-year conventional loan dropped to 6.73%, with jumbo and FHA loans also experiencing decreases. Despite these lower rates, affordability remains a concern for many potential buyers.
Purchase loan applications have shown an increase compared to last year, though weekly figures have been inconsistent. Refinance activity also saw a boost, but a significant wave of refinancing is unlikely as most existing mortgages carry rates above 6.5%. The Federal Reserve's monetary policy is a key factor, with projections indicating a potential rate hike in 2026 rather than a decrease.
Home price appreciation has been modest nationally, hovering around 1%, with the S&P Cotality Case-Shiller Index at 0.8% year-over-year. However, this national average masks considerable variation at the local level, with some cities experiencing significant price growth while others see declines. This divergence, coupled with unchanged capital gains tax exclusion thresholds, may be encouraging more homeowners to stay put, thus limiting resale inventory.