What happened to mortgage rates this week?
The Freddie Mac 30-year fixed mortgage rate fell 6 basis points to 7.18% this week as bond yields eased. That marks a third straight week of declines, though rates remain about one percentage point above year-ago levels. Markets were focused on the midterm elections and incoming jobs data, both of which shape expectations for future policy. Tuesday’s Job Openings and Labor Turnover Survey came in stronger than expected, with layoffs down slightly and a significant gain in job openings. That points to a potentially strong jobs report on Friday. While solid hiring supports housing demand over time, a stronger-than-expected report could also lift bond yields and slow the pace of rate declines in the near term.Â
Tuesday’s midterm elections gave Democrats a majority in both the House and Senate, as winning candidates connected with voters’ dissatisfaction with the economy. It is not yet clear whether the shift will be felt in the housing market. Many newly elected representatives have voiced discontent with the ongoing conflict in the Middle East, which has contributed to rising inflation, so any progress toward resolution could mean lower inflation and softer mortgage rates ahead.
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What does this mean for the housing market?
Although rates have eased over the last few weeks, they remain above 7%, keeping many buyers on the sidelines. October marked another month of a slowing housing market, with both buyers and sellers pulling back. Pending sales fell 10.5% year over year, the steepest decline in three years, as buyers contend with diminished purchasing power. New listings fell 7.5% year over year as sellers held back, discouraged by weak demand. Still, sellers aren’t delisting in droves, which suggests they are disengaging rather than acting out of distress. With 43% of active listings having had a price reduction, buyers who can afford to participate are in a relatively strong position, facing less competition and more price cuts.
