M
ortgage rates have dropped significantly in recent weeks, with the 30-year fixed-rate averaging 6.09% this week, according to Freddie Mac - its lowest level since February 2023. The 15-year fixed rate mortgage has also fallen to 5.15%, down from 6.54% a year ago.

    Economists are divided on whether rates will continue to drop and if the market is poised for a surge in homebuyers. Sam Khater, Freddie Mac's chief economist, expects rates to fall further, boosting demand for purchase and refinance loans. However, Orphe Divounguy, Zillow Home Loans senior economist, believes that with the central bank no longer buying mortgage debt, rates won't drop much further.

    Ralph McLaughlin, Realtor.com's senior economist, predicts rates will hover around 6% to 6.2% for the rest of 2024, potentially rising to the upper-5% range by next spring. This could lead to a rebound in home price growth if historically slow inventory doesn't respond quickly.

    Refinance applications have surged over the past week, with the refinance index up 24% from the previous week and purchase loan applications now about even compared to last year. However, pending sales remain stagnant, possibly due to buyers waiting for rates to settle before making a move.

    Improving affordability is also a factor, with Redfin estimating that the monthly median U.S. housing payment has decreased by $300 since April's all-time high. As a result, some experts believe the market will pick up in the typically slower fall and winter months.