Mortgage rates have eased closer to 6%, a sign the housing market is cooling off.
Lower rates open the market to 3 million borrowers who'd been priced out, according to Freddie Mac.
Markets expect the Fed to stop hiking rates, which could help mortgages become more affordable.
Mortgage rates are falling back near 6%, and that could help reopen the housing market to about 3 million buyers who were priced, according to Freddie Mac.
The government-sponsored enterprise said that the average 30-year fixed-rate mortgage inched lower to 6.09% on Thursday, notching its fourth-straight week of declines. That's the lowest rates have been since peaking at over 7% in November of last year, Freddie Mac chief economist Sam Khater said in a statement.
"This one percentage point reduction in rates can allow as many as three million more mortgage-ready consumers to qualify and afford a $400,000 loan, which is the median home price," Khater added.
Mortgage rates skyrocketed over the course of 2022, influenced by the Federal Reserve's rate hikes aimed at taking some heat out of the economy.
The Fed hiked rates another 25 basis-points on Wednesday, dialing back from the previous 50 basis-point hike in December. Investors are beginning to price in the end of the Fed's rate hike cycle in the coming months, which could lower interest rate volatility and cause mortgage rates to ease.
Other areas of the housing market are also showing signs of picking back up. Home builder sentiment is rising, and lumber prices have jumped 33% since the start of the year as buyers dip back into the housing market. Meanwhile, markets are pricing in another mild 25-basis-point hike from the central bank in March, which would bring the Fed funds rate target to 5%-5.25%.
But despite the steady easing of conditions in the housing market, some experts are still warning of a 2008-style housing crash, which could entail home prices plunging as the housing market undergoes a correction. Wharton professor Jeremy Siegel expects home prices to fall 10%-15%, and Goldman Sachs recently warned four major cities in the US could see a housing implosion on par with the last financial crisis.
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