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Mortgage rates are continuing their downward trend as investors keep a lookout for more signs of cooling inflation.

“This week, labor cost data provided a ray of hope as it showed that hourly compensation was lower than previously reported in the second and third quarters for all sectors except manufacturing,” writes Danielle Hale, chief economist at Realtor.com, adding that gas prices are also plunging.

Nadia Evangelou, NAR senior economist and director of real estate research, commented: 

“Mortgage rates continue to move down. According to Freddie Mac, the rate on a 30-year fixed mortgage dropped to 6.33% from 6.59% the previous week. Housing affordability rose about 8% in the last four weeks as mortgage rates moved closer to 6%. If inflation continues to slow down, mortgage rates may stabilize near 6% in 2023. With a 6% mortgage rate, housing will become more affordable for many buyers. While the typical family cannot currently afford to buy a median-priced home as the qualifying income exceeds earned income, housing will become affordable again for Americans if rates hover near 6%. In this scenario, the typical family will earn about $1,000 more than the income needed to purchase a mid-priced home. With more buyers back in the market, the housing market may turn around at the beginning of the new year.”

“Next week’s CPI data will confirm whether these trends are pervasive across the variety of goods and services consumers buy. Next week, we’ll also hear from the Fed, which is expected to announce another increase in the Fed Funds rate, but of a slightly smaller size–only 50 basis points compared with the 75 basis points in the previous four meetings. What’s less certain is how the Fed’s projections will have evolved since they were issued in September. These projections will show their expectations for economic growth and employment as well as the likely path of the Fed’s policy rate if conditions are consistent with the forecast.

  • Buying a home is a big decision, but there are many reasons why you should consider it.
  • The pride of ownership, home value appreciation, mortgage interest deductions, and potential property tax deductions are a few of the best reasons.
  • Other benefits include the capital gains exclusion, preferential tax treatment, building equity through mortgage reduction, and equity loans.
  • Community Ties: Owning a house you plan to stay in for a while also allows you to have an impact on your community with your taxes benefiting local infrastructure, schools, and organizations. You’ll also have a voice—if you wish—in how things are run in your area.
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