By Kate Wood | NerdWallet
Mortgage interest rates are in a pretty good place this week, rising so minimally that the incline could be easily mistaken for a flat surface. The 30-year fixed-rate mortgage rate rose three basis points, averaging 6.19%. A basis point is one one-hundredth of a percentage point.
Mortgage rates are one piece of the puzzle when it comes to the housing market. Other big variables, like the number of homes for sale and home prices, also influence how friendly the market feels to home buyers. As we kick off the last quarter of 2024, let’s look at where things stand.
Rates are fairly favorable
Even though we’ve seen a couple of weeks’ of rate increases, mortgage interest rates remain the lowest we’ve seen them in just over two years. The last time we had average 30-year rates in the sixes was September 2022. Current rates are also well off the highs we saw last year. Rates are nearly two percentage points below the high of almost 8% hit back in October 2023.
Lower interest rates allow home buyers’ budgets to stretch further. At last year’s peak of 7.79%, a buyer who could swing $2,200 in monthly principal and interest could afford a roughly $278,000 home. But at today’s 6.19%, that same buyer can afford a $318,000 home — an additional $40,000 in buying power.
You might think okay, if I can afford that much more in the 6% range, imagine what I could get if interest rates were even lower. But given current economic conditions, forecasters are predicting rates will only edge down slightly through the end of this year and into 2025. We’re talking going from the very low sixes to the very high fives, which for most will not make a huge difference.
Inventory is edging upward
A dearth of homes for sale has been an issue for years, but inventory is finally starting to pick up. In August 2024, there were 1.35 million existing homes — a number that doesn’t include new construction — on the market, according to the National Association…
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