Average rate on 30-year mortgage falls to 6.09%, according to Freddie Mac, hovering at lowest level since February 2023.
Applications for unemployment drop
The number of Americans applying for unemployment benefits fell to their lowest level in four months last week.
Jobless claims slid by 12,000, to 219,000, for the week of Sept. 14, the Labor Department reported Thursday. That's fewer than economists' expectations for 230,000 new filings.
Weekly filings for unemployment benefits, considered largely representative of layoffs, had risen moderately since May before this week's decline. Though still at historically healthy levels, the recent increase signaled that high interest rates may finally be taking a toll on the labor market.
In response to weakening employment data and receding consumer prices, the Federal Reserve on Wednesday cut its benchmark interest rate by a half of a percentage point as the central bank shifts its focus from taming inflation toward supporting the job market. The Fed's goal is to achieve a rare “soft landing,” whereby it curbs inflation without causing a recession.
“The focus has now decisively shifted to the labor market, and there’s a sense that the Fed is trying to strike a better balance between jobs and inflation,” said Stephen Innes of SPI Asset Management.
It was the Fed’s first rate cut in four years after a series of rate hikes in 2022 and 2023 pushed the federal funds rate to a two-decade high of 5.3%.
Inflation has retreated steadily, approaching the Fed’s 2% target and leading Chair Jerome Powell to declare recently that it was largely under control.
Despite lower mortgage rates, home sales drop
LOS ANGELES (AP) — Sales of previously occupied U.S. homes fell in August to the slowest annual pace in nearly a year even as mortgage rates eased and the supply of properties on the market continued to rise.
Existing home sales fell 2.5% last month, from July, to a seasonally adjusted annual rate of 3.86 million, the National Association of Realtors said Thursday.
Sales fell 4.2% compared with August last year. The latest home sales were short of the 3.9 million pace economists were expecting, according to FactSet.
Home prices increased on an annual basis for the 14th consecutive month. The national median sales price rose 3.1% from a year earlier to $416,700.
“Home sales were disappointing again in August, but the recent development of lower mortgage rates coupled with increasing inventory is a powerful combination that will provide the environment for sales to move higher in future months,” said Lawrence Yun, the NAR's chief economist.
Home shoppers had a larger selection of homes to chose from last month. All told, there were about 1.35 million unsold homes at the end of August, up 0.7% from July and 22.7% from August last year, NAR said.
That translates to a 4.2-month supply at the current sales pace, up from a 3.3-month pace at the end of August last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.
The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Existing home sales sank to a nearly 30-year low last year as the average rate on a 30-year mortgage surged to a 23-year high of 7.79%, according to mortgage buyer Freddie Mac.
Mortgage rates have been mostly easing since July, with the average rate on a 30-year home loan falling last week to 6.2%, the lowest level since February 2023.
