Mortgage rates in the U.S. fell to the lowest in six months, helping to ease the housing affordability crunch.
The average for a 30-year, fixed loan was 6.73%, down from 6.78% last week, Freddie Mac said in a statement Thursday.
The decline in rates from over 7% earlier this year has stoked homebuyer demand after a tough few months for the sales market. In June, contracts to buy previously owned homes — typically a leading indicator of sales — rose for the first time in three months from near record lows.
More relief could be on the way. While the Federal Reserve held its benchmark rate steady at its meeting Wednesday, Chair Jerome Powell signaled that the central bank could start cutting rates as soon as September.
Effects of a rate decline on the housing market could be more measured since shoppers are still confronting rising home prices and a slim supply of listings.
“Expectations of a Fed rate cut coupled with signs of cooling inflation bode well for the market, but apprehension in consumer confidence may prevent an immediate uptick as affordability challenges remain top of mind,” Sam Khater, Freddie Mac’s chief economist, said in the statement.
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