Resilient economy keeps mortgage rates above 7%

Mortgage rates rose slightly over the past week, with the U.S. economy continuing to show strength even as home sales remain tepid.

According to HousingWire‘s Mortgage Rates Center, the average 30-year rate for conforming loans stood at 7.11% on Tuesday, up slightly from 7.08% one week ago. Meanwhile, the 15-year conforming rate continued its steep rise and reached 6.99% on Tuesday after having reached a recent low point of 6.56% on June 21.

“The bond market has been very wild the last few days, but the spreads have behaved as well, keeping rates from being higher than they would have been if we had 2023 mortgage spread levels,“ HousingWire Lead Analyst Logan Mohtashami said. “The 15-year loan might not be that appetizing for investors compared to the 30-year loans lately.“

Little is expected to change in the short term as the odds of the Federal Reserve lowering benchmark rates at the end of this month appear low. According to the CME Group‘s FedWatch tool, market observers believe there is a 91.2% chance of rates remaining the same after the next Federal Open Market Committee meeting on July 30-31.

Speaking from a monetary policy conference in Portugal on Tuesday, Fed Chair Jerome Powell held firm on the stance that officials need to see further cooling of inflation and gain clearer understanding of pricing pressures before cutting rates.

“We just want to understand that the levels that we’re seeing are a true reading on what is actually happening with underlying inflation,“ Powell said, according to reporting from Reuters. “We want to be more confident, and frankly because the U.S. economy is strong … we have the ability to take our time.“

Also on Tuesday, data from the U.S. Bureau of Labor Statistics showed that job openings rose compared to the prior month, although they are down compared to the same time last year. More available jobs in business sectors such as government and durable goods manufacturing offset losses in food services and private education.

Data from Altos Research shows that the spring homebuying season has peaked and listings are expected to recede over the latter half of 2024. Mortgage rates have remained lower due in part to more supply as the 646,000 homes on the market this week was up 39% year over year. But the number of new listings also shrank from the prior week and was only 8% above year-ago levels.

Melissa Cohn, regional vice president for William Raveis Mortgage, noted that the ramp-up to the presidential election is having an impact on mortgage pricing.

“There have been a lot of interesting elections throughout time, but I think that with what’s going on in the world today, this is certainly an election that the markets have to pay close attention to,“ Cohn said in a statement provided to HousingWire. “I think that we have just gotten a very strong wake-up call that it’s time to put the election into the mortgage rate equation.“