Prospective homebuyers are receiving encouraging news as mortgage rates continue to decline. Last month, rates soared to 7.04%, the highest point since the previous May. However, this week, the average for 30-year fixed-rate mortgages has fallen to 6.76%, according to Freddie Mac.
Freddie Mac’s Chief Economist, Sam Khater, noted, “This week’s mortgage rates reached their lowest level in over two months. The decline, coupled with a modest increase in inventory, presents a hopeful sign for those looking to enter the housing market.”
In comparison to last week when the average rate stood at 6.85%, this week’s drop is notable. The rates for 15-year fixed mortgages have also seen a decrease, moving from 6.04% to 5.94%.
Those preparing to explore mortgage options can consider using Credible, a resource that allows users to compare interest rates from various lenders swiftly.
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Home prices begin to adjust downward in various markets
As home prices begin to stabilize, many areas are witnessing declines, although they remain significantly above pre-pandemic levels. Data from Zillow indicates that approximately 23% of sellers reduced their listing prices in January.
According to Zillow’s Chief Economist, Skylar Olsen, “Homeowners are starting to re-enter the market as the impact of the rate lock diminishes, yet buyers are still facing high monthly costs.”
Home values currently stand at about 44% higher than they were before the pandemic, with a 2.6% increase from last year. Despite the ongoing high prices and hesitant buyers, an uptick in sellers entering the market is being observed as the effects of rate locks start to fade.
New listings surged nearly 12% year-over-year in January. Many sellers, influenced by significant life changes such as job relocations or family expansions, seem eager to capitalize on current conditions. Zillow found that 78% of sellers were motivated by such events.
Intriguingly, many sellers are achieving prices above their original listings. In December, nearly 25% of homes sold exceeded their initially set prices, a noticeable rise from the 19% recorded before the pandemic.
For those aiming to buy a home, Credible can assist in identifying the most suitable mortgage rates based on individual financial situations.
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Renting remains a more economically viable option in many regions
While rental costs are on the rise, renting remains generally more affordable than home ownership in most U.S. markets, a recent report from Realtor.com reveals.
Pittsburgh and Detroit are the two metropolitan areas showing lower average listing prices, making them two of the more affordable cities for homebuyers. The average home price in Pittsburgh is approximately $229,700, while Detroit’s stands at $239,950. However, rental prices are increasing in these cities, suggesting that buying might be more economical over time.
Realtor.com Chief Economist Danielle Hale remarked, “For most Americans, homeownership embodies a crucial aspect of the American Dream, yet the lower monthly costs associated with renting—observed in 48 out of the 50 largest markets—are significant factors influencing the market. This cost disparity may lead to an increase in renter households and a decrease in the homeownership rate by 2025.”
Although renting is cheaper than buying, rental prices remain high. January 2025 rents are lower than those recorded in the previous two years, but they still surpass January 2020 figures by $257, according to Realtor.com data.
For those exploring mortgage options based on credit scores and income, Credible provides a platform to compare multiple lenders simultaneously.
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