Homebuyers are rejoicing as mortgage rates dip below 7%, marking the lowest levels since August, according to Freddie Mac’s recent report. The rate, now at 6.95%, could serve as a catalyst for a healthier housing market in the coming year.

This rate adjustment is a significant boon for prospective homeowners who were deterred by higher borrowing costs in recent months. Jessica Lautz, deputy chief economist at the National Association of REALTORS®, notes that this brings the monthly mortgage payment for a $400,000 home to $2,118—a substantial $183 less per month compared to rates earlier this fall, which soared to 7.79%.

Economists are optimistic that rates will continue to fall into the new year, and the Federal Reserve’s decision to maintain its benchmark interest rate, with potential rate cuts in 2024, adds to the positive outlook. This development is expected to ease pressure on various interest rates, including long-term mortgage rates. The National Association of REALTORS® forecasts mortgage rates to average 6.3% in 2024.

Jessica Lautz expresses optimism about the direction of sales activity, stating, “the momentum is moving in the right direction for stronger sales activity in 2024.” The hope is that lower mortgage interest rates will not only encourage homebuyers to enter the market but also stimulate increased homebuilder activity to address the pressing need for inventory.

Freddie Mac’s latest report reveals the following national averages for mortgage rates in the week ending December 14:

• 30-year fixed-rate mortgages: averaged 6.95%, down from the previous week’s 7.03%.
• 15-year fixed-rate mortgages: averaged 6.38%, a slight increase from the previous week’s 6.29%.