Mortgage rates trend down as the labor market loosens

Mortgage rates kept sliding toward 7% as HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conforming loans at 7.25% on Tuesday, below the rate of 7.34% one week ago. 

At the same time one year ago, the average 30-year conforming rate was 6.8%. Meanwhile, the 15-year conforming fixed rate averaged 6.77% on Tuesday, up from 6.71% one week earlier.

“We have an excellent tug-of-war on rates now because people have wised up to the fact that the labor market isn’t tight anymore, and the Fed doesn’t seem like it wants to get ahead of the curve on a softer labor market,” HousingWire lead analyst Logan Mohtashami said. “So, the bond market is mindful of this as it wants to avoid getting caught off guard if jobs week shows another week of the labor market getting softer. 

“For the summer, the labor market data is the biggest driver of where rates can go; if we do see more material weakness in the labor data, rates can go lower; if it firms up, rates can stay elevated.”

Between May 17 and May 24, for-sale inventory rose from 578,016 to 594,548, reaching its peak for 2024. During the same period, there were 72,329 new listings, according to Altos Research data.

“The mortgage rate lockdown premise holds that very few people will list their homes when mortgage rates are this high, thus suppressing inventory. But 2024 has proven that theory wrong,” Mohtashami wrote on Saturday. “This week, we saw inventory growth of 16,532. All smiles here — last year, we didn’t have this type of positive growth.”