Mortgage Rates Just Dropped Again—Is It Enough To Save the Spring Housing Market?

Mortgage rates ticked down again this week, marking its fourth straight week of declines. But is it enough to breathe new life into the spring housing market?

For the week ending April 6, the interest rate for a 30-year fixed-rate home loan averaged 6.28%, according to Freddie Mac. Although that’s much higher than a year ago, when rates were at 4.72%, it’s still at least down a bit from the 20-year high they reached near the end of last year.

“Compared to the recent 7% average rate peak, the latest rate saves $140 per month for a homebuyer on a $300,000 loan,” says National Association of Realtors® Chief Economist Lawrence Yun, who is optimistic that rates will continue this downward trend.

“Though week-to-week rate changes can move up and down, the longer-term prospect on rates is for further improvement, with a clear possibility of going under 6% by the year’s end,” adds Yun.

This reprieve should come as a relief to homebuyers who’ve been sitting on the sidelines wondering whether they should dive into this spring’s steeply priced real estate market. Still, it’s not all good news, by far.

Here’s what the latest statistics mean for homebuyers and sellers in this week’s installment of our column “How’s the Housing Market This Week?”

‘A mixed bag’ for homebuyers this spring

“This spring season presents a mixed bag of trends for both homebuyers and sellers,” notes Realtor.com® economic data manager Sabrina Speianu in her analysis.

For one, listing prices for the week ending April 1 are still higher than last year, although barely so, growing by just 4.4%.

“Home listing prices are advancing at the slowest pace since June 2020, and could slow further,” says Speianu.

Realtor.com economists have previously forecasted an outright price decline by the summer, and the national median sales price (what buyers and sellers agreed on) has already begun to fall for the first time in over a decade.

Still, with listings hovering at a median asking price of $428,000, “the final week of March and beginning of April still registered higher list prices than all but the priciest five months of 2022,” points out Speianu.

The incredible shrinking housing market

Another downside for buyers is that the week ending April 1 marked the 39th straight where fewer homeowners listed their homes for sale.

“Lower levels of fresh new home listings continues to constrain home sales, which continue to remain at low historical levels,” Speianu explains.

While the total number of real estate listings is up by 53% compared with a year earlier, many of these housing options are stale—picked and passed over already. On average, listings lingered 18 days longer than at this time last year, a continuing sign that buyers aren’t impressed by their options. In fact, properties have been idling longer for 35 weeks in a row.

But this sluggish pace might pick up as more homebuyers get out there and hit some open houses amid rising temperatures and dwindling mortgage rates.

“It is expected that time on market will continue to decrease this spring as we head toward the annual best time to sell a home in mid-April,” Speianu says. “Nevertheless, sellers will need to adjust their expectations and pricing to account for the current market conditions.”

“Buyer demand tends to be sensitive to mortgage rate changes, increasing with each downward tick in rates,” adds Realtor.com economist research analyst Hannah Jones. “We can expect to see a similar bump in housing activity as a result of the recent drop in mortgage rates.”

However, Jones points out, “Despite these pick-ups in demand, by and large, the housing market remains unaffordable for many would-be buyers.”

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