Key facts
- Mortgage rates remain above 7% despite Federal Reserve rate cuts.
- Home prices are starting to drop in some areas.
- The yield on 10-year Treasury bonds has risen sharply.
- 2024 was on track to have the fewest existing home sales since 1995.
The 30-year fixed-rate mortgage saw a slight decrease to 7.32 percent, continuing to challenge prospective homebuyers' affordability. Home prices are beginning to decline in certain regions. This rise in mortgage rates persists even after the Federal Reserve implemented a full percentage point in interest rate cuts, which had initially raised hopes for lower financing costs. Experts suggest that mortgage rates are unlikely to return to the lows seen in recent years, with a 'new normal' of 6% to 7% anticipated due to strong economic growth and persistent inflation. The yield on 10-year Treasury bonds, a key driver of mortgage rates, has increased significantly. Factors contributing to this include sticky inflation, potentially making the Fed more cautious about further rate cuts, and a robust economy that can sustain higher inflation. For 2024, existing home sales were on track to be the lowest since 1995, with elevated mortgage rates and low inventory cited as primary reasons.