Economists' Outlook

Housing stats and analysis from NAR's research experts.

Instant Reaction: Mortgage Rates, February 04, 2021

Mortgage rates remained unchanged at 2.73% from the previous week. The 10-year Treasury yield – a key benchmark for mortgage rates - drifted higher as coronavirus cases in the United States are falling and a stimulus deal is likely to be reached sometime soon. Given mortgage rates follow the trend of the 10-year Treasury yield, rates may rise modestly in the upcoming weeks. NAR is forecasting the 30-year fixed rate to average 2.9 and 3.0 percent in the first and second quarter of 2021, respectively.

In the meantime, pending home sales rose by 21% in December compared to a year earlier, to an all-time high level for December. Since pending home sales are an indicator for housing pent-up demand, this translates to more Americans becoming homeowners in the following months and benefiting from these low mortgage rates.

Nevertheless, not all families have the same opportunities for homeownership, with many facing more constraints in their effort to achieve the American Dream. There are sizeable differences in homeownership rates across racial groups with the rate of homeownership for minority families lagging behind the national average. Given that homeownership contributes to wealth accumulation and that the homeownership rate is lower in minority groups, data shows that the net worth for these groups is also lower. At $188,200, the net worth of a typical white family was nearly 8 times greater than that of a Black family ($24,100) in 2019.

Black homeownership rate remains nearly 30% below the rate for white Americans. In 2019, the homeownership rate for white Americans was 70% compared to 42% for Black Americans. In the meantime, 43% of Black Americans can afford to buy the typical home compared to 63% of white Americans. While saving for a down payment can be the biggest hurdle for renters to become homeowners, increased access to federal down payment assistance based on a certain income threshold is vital to ease the homeownership gap between white and Black Americans. The proposed tax credit of $15,000 for first-time homebuyers could help more Black Americans to achieve their homeownership dream. The National Association of Realtors released recently a five-point plan that would help close the persistent gap in homeownership rates between white and Black Americans.