M
ortgage rates have been on a steady climb for five weeks, dampening enthusiasm for home sales despite September's boost from low rates. The 30-year fixed-rate mortgage averaged 6.72% this week, according to Freddie Mac, with some daily surveys suggesting it could be as high as 7%. This is a significant jump from last week's rate of 6.54%, but still lower than the 7.76% average seen a year ago.

    Inflation remains near the Federal Reserve's target of 2%, which is a positive sign for the economy. However, inventory levels are expected to decline during the holiday season, peaking before the slowdown. The U.S. economy has shown signs of improvement in recent months, but the housing market continues to struggle due to rising mortgage rates.

    The latest Freddie Mac survey shows that the 15-year fixed rate averaged 5.99%, up from 5.71% the previous week. Another source, Mortgage News Daily, reported a 30-year mortgage rate of 7.02% on October 31, marking four consecutive days at or above 7%. Despite this volatility, some experts predict stability in mortgage rates by the end of November and into early December.

    The recent surge in pending sales may have already occurred in September, when mortgage rates were lower. That month saw a 7.4% increase in pending sales compared to August, reaching their highest level since March. However, year-over-year, pending sales rose only 2.6%. Experts believe that buyers and sellers are highly sensitive to interest rates.

    Mortgage applications have been sluggish, with refinance applications down 6% from the previous week while purchase applications rose 5%. Despite this mixed signal, overall application activity is slowing. As the market waits for mortgage rates to ease, inventory levels have started to decline ahead of the holiday season, although they remain higher than in recent years but still lower than pre-pandemic levels.