NEW YORK — The average rate on a 30-year U.S. mortgage fell for the fifth straight week to its lowest level since early April, an encouraging sign for potential buyers who have wrestled with rising home prices.
The long-term rate fell to 6.67% from 6.77% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.95%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, fell to 5.80% from 5.89% last week. A year ago, it was 6.25%, Freddie Mac said.
High mortgage rates can add hundreds of dollars a month in costs for borrowers and reduce their purchasing power. That's helped keep the U.S. housing market in a sales slump that dates back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic.
Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. They've remained sluggish so far this year, as many prospective homebuyers have been discouraged by elevated mortgage rates and home prices that have continued to climb, albeit more slowly.
High borrowing costs are also putting pressure on the new home market. Last week, the government reported that sales of new U.S. homes fell nearly 14% in May from the previous month.
Recent data suggests sales could pick up in the coming months, especially with the recent decline in mortgage rates. A seasonally adjusted index of pending U.S. home sales rose 1.8% in May from the previous month and increased 1.1% from May last year, the National Association of Realtors said last week.
There's usually a month or two lag between a contract signing and when the sale is finalized, which makes pending home sales a bellwether for future completed home sales.
