Mortgage rates just hit a 10-month low, according to mortgage buyer Freddie Mac.
The average 30-year fixed rate dipped to 6.56% this week, down slightly from 6.58% last week. A year ago, that same loan averaged 6.35%.
“Purchase demand continues to rise on the back of lower rates and solid economic growth,” said Sam Khater, Freddie Mac’s chief economist. “Though many potential homebuyers still face affordability challenges, consistently lower rates may provide them with the impetus to enter the market.”
The 15-year fixed mortgage held steady at 5.69%, the same as last week. One year ago, the rate was slightly lower at 5.51%.
But even with lower rates, affordability remains a major issue. Realtor.com recently reported that fewer than 30% of homes on the market are within reach of the average household.
As of August, the maximum affordable home price for a median-income family was $298,000 — nearly $30,000 less than in 2019, even though incomes have risen 15.7% since then.
“Even as incomes grow, higher interest rates have eroded the real-world purchasing power of the typical American household,” said Danielle Hale, chief economist at Realtor.com. She added that many buyers are being pushed toward smaller homes, longer commutes, or delaying homeownership altogether.
The squeeze has been so severe that homebuying has dropped to its lowest level since the mid-1990s, according to Harvard University’s Joint Center for Housing Studies.