Mortgage rates continued their wave-like fluctuations, dropping slightly from last week when rates averaged closer to 7%. A 30-year, fixed-rate mortgage averaged interest rates of 6.89% as of July 11, Freddie Mac reported.
Rates currently average lower than they did at this time last year when they hovered around 6.96% for 30-year mortgages.
"Following June’s jobs report, which showed a cooling labor market, the 10-year Treasury yield decreased this week and mortgage rates followed suit," Freddie Mac Chief Economist Sam Khater said.
The average rate for a 15-year mortgage also dropped to 6.17%, compared to 6.25% last week. These mortgage rates are also lower than they were last year when 15-year mortgages averaged rates of 6.30%.
Paired with lower rates, inventory is rising, bringing some good news to current buyers.
"We’re also seeing more inventory on the market, including a fair number of listings with price cuts, which is an encouraging sign for prospective buyers," Khater said.
If you think you’re ready to shop around for a home loan, consider using Credible to help you easily compare interest rates from multiple lenders in minutes.
THE SOUTH IS RANKED HIGHEST FOR PROSPECTIVE HOMEBUYERS, DESPITE HIGH UNDERWATER MORTGAGE RATES
Despite lower mortgage rates and higher home inventory, high housing prices continue to drive affordability down. As of the four weeks ending July 7, average home prices hit yet another all-time high at $397,482, according to Redfin data.
The recent rise in home prices is a 4.7% increase year-over-year, which is the largest increase in more than four months. While inventory is up, it’s still historically low, and paired with high prices, this creates a market that’s unfriendly for most buyers.
Still, the fact that inventory is slowly rising does bode well for the market as a whole. Many of these listings, however, grow stale, leading to a cut in price — another good thing for buyers, but not sellers. Currently, over 60% of homes are listed for at least a month before going under contract.
"Homes are sitting longer than they usually do this time of year, which has led to some — but not all — homes selling for a little bit less," Julie Zubiate, a Redfin Premier agent in the Bay Area, said.
"The longer rates stay high, the pickier buyers are getting. Buyers will jump ship or try to negotiate the price down with any sort of tiny problem; sellers should take the time to prep, price and promote their homes correctly to find the right buyer," Zubiate said.
Learn about mortgage rates and what is needed to obtain a home loan today with the help of Credible.
VA UPDATES HOME LOAN BENEFITS TO HELP VETERANS BUY HOMES IN DIFFICULT MARKETS
One generation that remains stubbornly optimistic about the homebuying market is Generation Z. They have one of the more favorable outlooks and many of them plan to buy sometime this year, a ServiceLink study found.
Out of those surveyed, 63% of Gen Z plan to buy a home in 2024, compared to 59% of Millennials. Gen X is a little older, so many members of the generation have already bought homes, which is likely why only 49% of Gen Xers plan to buy this year.
Gen Zers may be more confident in the homebuying process, but many don’t have the necessary income to buy. The average income for 33% of Gen Z survey respondents was under $50,000 and just 22% had incomes greater than $100,000. Considering the average income needed to buy a house is over $100,000, this leaves many Gen Zers unable to buy.
This lack of affordability is why some members of Gen Z are pooling money with friends to realistically afford a home. Nearly 22% of Gen Zers who were polled have combined money with friends to purchase a home. Just 14% of millennials responded the same way and 10% of Gen X also responded the same, according to ServiceLink.
To see if you qualify for a mortgage based on your current credit score and salary, consider visiting Credible, where you can compare multiple mortgage lenders at once.
HERE'S HOW TO EVALUATE HOMEOWNERS INSURANCE COVERAGE AMID HURRICANE SEASON
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.