Mortgage rates have seen a significant decline this week, but some homeowners in the United States are still facing foreclosure.
The contract rate for a standard 30-year fixed-term loan averaged 6.87% in the week ending June 20, according to mortgage financing giant Freddie Mac's Primary Mortgage Market Survey posted Thursday. That is 0.08% lower than the previous week and marks the lowest level recorded since early April.
Apart from the 30-year loan, the contract rate for the standard 15-year term also fell to 6.13% in the same period, a 0.04% decline from the week before.
"Mortgage rates fell for the third straight week following signs of cooling inflation and market expectations of a future Fed rate cut. These lower mortgage rates coupled with the gradually improving housing supply bodes well for the housing market," Sam Khater, Freddie Mac's chief economist, said in a release.
How Mortgage Rates Is Affecting the Housing Market
With the mortgage rates remaining elevated, new home construction has declined, performing much weaker than expected in May, per CNN, citing data from several government statistics. A seasonally adjusted annual rate notes that 1.28 million units were added to the market in May, the lowest level since 2020. It is also down 5.5% from April. Economists projected homebuilding to gain by 1% in May.
In addition to a poor homebuilding growth rate, the number of building permits issued was below the expectations of economists. Furthermore, homebuilding sentiment across the country declined, falling to the lowest level recorded since December.
"Persistently high mortgage rates are keeping many prospective buyers on the sidelines," National Association of Home Builders (NAHB) Chairman Carl Harris said in a release. "Home builders are also dealing with higher rates for construction and development loans, chronic labor shortages and a dearth of buildable lots."
The elevated mortgage rate has priced out many Americans from the housing market. Hopeful home buyers earning a median-income household would now have to save up over $127,000 for a down payment to afford a monthly mortgage payment on a median-priced home, according to a newly published Zillow report.
