This week, mortgage rates saw a welcome decrease after four consecutive weeks of increases. The average rate for a 30-year fixed-rate mortgage dropped by 12 basis points to 6.95% for the week ending June 5, based on data from Zillow provided to BW. Despite this positive change, experts are not anticipating significant drops in rates anytime soon. It is expected that the Federal Reserve will maintain the federal funds rate at the upcoming meeting, keeping mortgage rates hovering around 7% in the near future.
For prospective buyers hoping for rates closer to 6.5%, there is hope on the horizon, albeit with some patience required.
At a recent event, Lawrence Yun, chief economist at the National Association of Realtors (NAR), projected that mortgage rates will average 6.4% in the second half of this year and 6.1% in 2026. Yun emphasized the impact of higher mortgage rates on new home buyers and the housing market, highlighting the need for lower rates to stimulate real estate activity.
Yun pointed out the challenges faced by the housing market due to the economy falling short of Federal Reserve targets. Despite these obstacles, Yun remains optimistic, citing positive trends in shelter costs, job growth surpassing pre-pandemic levels, and wages outpacing consumer price increases as factors that could influence future rate cuts by the Fed.
While the overall real estate market is struggling, certain regions like Boston, Buffalo, Hartford, and Providence continue to see strong demand and quick sales. Conversely, markets in Miami and the Sun Belt region are experiencing slower activity compared to other parts of the country.