Even after dropping considerably over the past month, mortgage rates remain well above 7% ahead of the next U.S. jobs report and the next meeting of Federal Reserve policymakers.
Mortgage rates were nearly flat on a weekly basis as HousingWire’s Mortgage Rates Center showed that the average 30-year rate for conforming loans was 7.23% on Tuesday, down only 2 basis points from one week ago. Conversely, the 15-year conforming rate rose 17 basis points during the week to reach 6.94% on Tuesday.
One year ago, the 30-year rate averaged 6.88% while the 15-year rate was at 6.07%.
HousingWire lead analyst Logan Mohtashami noted the recent volatility in the 10-year Treasury yield, another factor that impacts mortgage rates. But he added that spreads have improved this year relative to last year.
“If we took the worst levels of the spreads from the previous year and incorporated those today, mortgage rates would be roughly 0.60% higher today,“ Mohtashami wrote on Saturday. “So, as frustrating as the spreads can be, they are much better than last year. If the spreads return to normal, we could see a 0.75% to 1% improvement in mortgage rates just from that — without the 10-year yield moving lower.“
The U.S. Bureau of Labor Statistics (BLS) will release its jobs report for May on Friday. Economists are forecasting a gain of 190,000 jobs during the month, up from the 175,000 jobs added in April, which was the lowest level of 2024. And the unemployment rate is expected to remain unchanged at 3.9%.
The jobs market continues to tighten as the BLS reported on Tuesday that job openings for April fell below 8.1 million. That was down 296,000 positions on a monthly basis and down 1.8 million year over year.
Meanwhile, the Federal Open Market Committee is set to meet June 11-12 and release a new summary of economic projections. The Fed is not expected to change its benchmark rate, which has remained at a range of 5.25% to 5.5% since July 2023. Expectations of multiple rate cuts in 2024 have been dashed as inflation continues to run above the Fed’s 2% annual target and employers continue to add jobs at a healthy clip.
The typically brisk spring homebuying season has been relatively subdued, with Lawrence Yun, chief economist for the National Association of Realtors (NAR), recently calling the market activity a “disappointment.“
NAR reported that the annual sales rate for existing homes dropped by 1.9% from March to April, while the sales rate for new homes tumbled 4.7% during the same period, according to data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Altos Research reported that a total of 605,000 single-family homes were listed for sale this week. That was up 1.7% from the prior week and 39% higher than year-ago levels.
Although states like Arizona, California, Florida, Georgia and Texas are “driving the bulk of the inventory increase for country,“ most states have seen for-sale inventories rise at least 30% since June 2023, Altos founder and president Mike Simonsen wrote on Monday.
The 406,000 pending sales this week, however, were only 1% higher on a year-over-basis.
“Any of the growth in home sales feels like it has evaporated,“ Simonsen wrote. “Also, the pending sales count will typically start declining in mid-June, as the market shifts from the spring season to the summer. So, we’re probably at the peak of the sales now.“