Following the bond market trend, mortgage rates fell even further this week. According to Freddie Mac, the average rate for a 30-year fixed mortgage dropped to 6.42% from 6.60% the previous week. With rates below 6.5%, more Americans can purchase the median-price home by putting 18% down without being cost-burdened.
While it takes one to two months to close on a house, data shows that falling rates during December and January brought more buyers back to the market. In February, 40,000 additional existing homes were sold compared to January, boosting activity by 17 percentage points. However, activity typically rises by 5 percentage points resulting in 15,000 additional existing homes on average between these two months of the year. New home sales have also increased during these months. If mortgage rates continue to move down, the housing market may rebound faster than expected.