Mortgage rates decreased for the third week in a row, down another three basis points last week according to the Freddie Mac Primary Mortgage Market Survey released on December 31st. After starting the year close to 7%, this is an 85-basis point improvement and its lowest level in 2025, an encouraging sign for potential homebuyers heading into the new year.
Due to the Christmas and New Year’s Holidays, no mortgage application data was published by the Mortgage Bankers Association this week.
The Federal Reserve on Tuesday released minutes from its highly divisive meeting earlier this month, which concluded with a vote to lower interest rates again that appeared to be an even closer call than the final vote indicated. Officials expressed a variety of opinions during the meeting. Ultimately, the Federal Open Market Committee approved a quarter-percentage point cut by a 9-3 vote, the most dissents since 2019, as officials debated the need to support the labor market against concerns about inflation. “Most participants judged that further downward adjustments to the target range for the federal funds rate would likely be appropriate if inflation declined over time as expected,” the document said. With that, though, came misgivings over how aggressive the FOMC should be in the future. “With respect to the extent and timing of additional adjustments to the target range for the federal funds rate, some participants suggested that, under their economic outlooks, it would likely be appropriate to keep the target range unchanged for some time after a lowering of the range at this meeting,” the minutes said.
National growth in home values stabilized this fall as mortgage rates dropped, but major metros in the South and West continued to see declines, according to a key home price index. The value of single-family homes as measured by repeat transactions rose 1.4% in October compared to a year earlier, according to data from the S&P Cotality Case-Shiller Index released on Tuesday. But 16 of the 20 markets tracked in the index declined month-over-month in October, signaling broad price stagnation. “October’s data show the housing market settling into a much slower gear,” says Nicholas Godec, head of fixed income tradables and commodities at S&P Dow Jones Indices. “Short-term momentum has essentially stalled.” Softer mortgage rates may have helped stabilize the market, with the 30-year fixed rate at its lowest monthly average in more than a year. “Momentum in the housing market is struggling to pick up as affordability constraints and a softening labor market weigh on demand,” says Realtor.com® Senior Economist Joel Berner.
