Mortgage Rates Drop to the 5s: What It Means for You
Mortgage rates have steadily declined over the past few months,with the 30-year mortgage rate falling by more than 1.0% sinceApril 2024, bringing rates to their lowest levels since February 2023.
As of today, mortgage rates are 5.75% to 5.875% for single family home buyers with excellent credit score and at least 20% down payment.
No Impact Yet
Closings, supply and new listings continue to decline in Chicago as prices continue rising. New Listings in the City of Chicago were down 7.8 percent for detached homes and 12.4 percent for attached properties. Listings Under Contract decreased 0.4 percent for detached homes and 11.6 percent for attached properties. The Median Sales Price was up 7.9 percent to $340,000 for detached homes and 5.1 percent to $366,750 for attached properties. Months of Supply of Inventory decreased 10.8 percent for detached units and 5.7 percent for attached units.
What Could Happen
Rates continuing to fall deeper into the 5s could have a significant psychological impact on both potential homebuyers and sellers. Buyers may come off the fence but not until the downward movement on the rate stabilizes. Buyers want to see what the new rates will look like when they ultimately settle. The election and super high prices may make buyers cautious also, regardless of rates.
But we will see more inventory, as sellers sitting cozy with their rates in 3s and 4s may view 5s as a manageable new norm, and finally decide to sell and buy. In the short term, this could harm buyers wanting to jump in, since sellers reacting to the changes need time to ready their home for sale. Or sellers might decide to wait for the Spring 2025 market to list. Regardless of rates, there continues to be a huge shortage of homes for sale, particularly rehabbed starter homes under $500,000.