A week earlier, Freddie Mac reported in a statement on Thursday that borrowing costs have been easing from recent peaks, with declines occurring in five out of the past seven weeks. Although this drop has encouraged some potential buyers to take action, high home prices and a limited number of listings have largely kept others from entering the market. Additionally, some buyers are holding off, anticipating that mortgage rates might decrease further later this year.
"Despite the improving mortgage rate environment, prospective buyers are staying on the sidelines as they navigate a combination of high home prices and ongoing supply shortages," said Sam Khater, Freddie Mac’s chief economist, in the statement.
Market expectations suggest that the Federal Reserve will lower its benchmark interest rate at its upcoming meeting, with a likely reduction of 25 basis points.
High housing costs continue to strain many consumers. Shelter inflation was a significant factor in an unexpected rise in consumer price growth in August, indicating that policymakers might need to approach rate cuts more cautiously.
"Home prices have not significantly dropped at the national level, despite decreased buyer demand, due to inventory remaining below pre-pandemic levels," noted Hannah Jones, a senior economist at Realtor.com.
