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Mortgage rates are mostly holding steady despite ongoing economic headwinds. The 30-year fixed-rate mortgage averaged 6.39% this week, Freddie Mac reports. It’s a rate home buyers are getting used to.
“Economic crosscurrents have kept rates within a ten-basis-point range over the last several weeks,” says Sam Khater, Freddie Mac’s chief economist. “After the substantial slowdown in growth last fall, home prices stabilized during the winter and began to modestly rise over the last few months. This indicates that while affordability remains a hurdle, home buyers are getting used to current rates and continue to pursue homeownership.”
Steady rates are instilling more confidence in home buyers who are turning to new construction for greater inventory options. Home builders also report feeling more optimistic about the outlook for new-home sales and resuming more single-family construction.
Mortgage rates, though moderating, may experience slight fluctuations from week to week, but economists predict they’ll fall over the remainder of the year. “With inflation easing further and the Federal Reserve expected to pause its rate hikes soon, mortgage rates will stabilize near 6% in the second half of the year,” says Nadia Evangelou, senior economist and director of real estate research for the National Association of REALTORS®.
With a 6.4% mortgage rate, the typical home buyer can afford to purchase a home up to $380,000—just 2% less than the national median home price—if the buyer puts 20% down, Evangelou notes. About 45% of listings fall within this price range, she adds.
Freddie Mac reports the following national averages with mortgage rates for the week ending May 18:
- 30-year fixed-rate mortgages: averaged 6.39%, rising from last week’s 6.35% average. A year ago, 30-year rates averaged 5.25%.
- 15-year fixed-rate mortgages: averaged 5.75%, unchanged from last week. A year ago, 15-year rates averaged 4.43%.
