Mortgage rates continue to drop over last couple months

Mortgage rates have reached their lowest level since May, according to data released by Freddie Mac.

The big picture: The rate on the 30-year fixed mortgage decreased from 6.67% to 6.61% from the week before. 

• Rates have fallen for the ninth consecutive week and have dropped over a full point from 7.79% in October.
• While the decline in rates should theoretically benefit potential homebuyers, the limited inventory of existing homes on the market poses affordability challenges.

Driving the news: Mortgage rates have remained steady, tracking the yield on the 10-year Treasury, after the Federal Reserve decided to hold its benchmark rate steady in December.

• The National Association of Realtors forecasts rates to average 6.3% in 2024, while Realtor.com predicts rates to average 6.8% for most of the year before decreasing to 6.5% by year-end.
• Homebuyers have been slow to respond to the decline in rates during the holiday season, but a stronger response is expected in the new year if rates remain low.
• In November, there was a 7.5% increase in newly listed homes on the market compared to the previous year, indicating potential increased activity from sellers.