Average mortgage rates for 30-year and 15-year mortgages fell to all-time lows this week, Freddie Mac said in a report on Thursday.
The 30-year average is 2.86%, breaking the prior low of 2.88% set in the first week of August, and the 15-year average is 2.37%, beating last week’s record low of 2.42%, the mortgage financier said.
The rates are driving demand in the housing market, helping to counter-balance an economic slowdown that showed signs of worsening after the COVID-19 pandemic flared in some of the nation’s largest states in recent months, said Sam Khater, Freddie Mac’s chief economist.
“These low rates have ignited robust purchase demand activity,” Khater said.
U.S. home sales surged at a record pace in June and July as purchases that were delayed during pandemic lockdowns were shifted later in the year.
Seasonally adjusted existing-home sales jumped 25% in July, beating the prior record monthly gain of 21% set in June, the National Association of Realtors said in an Aug. 21 report.
The supply of homes on the market was the lowest for any July since NAR started tracking the data about five decades ago, said Lawrence Yun, NAR’s chief economist.
Existing home sales in 2020 likely will total 5.4 million, a gain of 1.1% from last year, Yun said. Sales of new houses probably will rise 17% to 800,000, Yun said.
Early in the pandemic, before it was clear the Federal Reserve’s intervention in the bond market would drive mortgage rates to all-time lows, Yun projected home sales in 2020 would plummet 15% this year.
“The buyers are coming in because of the low interest rates – that’s the No. 1 reason in my view,” Yun said in an interview.
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