M
ortgage rates have stabilized, but demand remains weak. Agents are optimistic that rising inventory and increased bargaining power will encourage buyers to make a move this spring.

    Key points:

    * The 30-year fixed-rate mortgage has hovered around 6.85% for five straight weeks.

    * Pending sales and mortgage applications are sluggish, indicating that high rates are deterring buyers.

    * However, more inventory and balance in the market could lure buyers back, along with increased bargaining power.

    * Mortgage rates have fallen slightly, but remain similar to last year's averages around this time.

    The current rate stability is a positive sign for consumers as they approach the spring homebuying season. "This stability continues to bode well for potential buyers and sellers," said Sam Khater, Freddie Mac's chief economist.

    Despite optimism for a stronger sales year, 2025 has gotten off to a slow start. Altos Research data shows pending sales are about 3% behind last year's pace. Inflation is driving elevated rates, making it more affordable to rent than buy in many areas.

    Home price growth has slowed, with median home prices up only 2% compared to last year. If rates remain high, prices could decline, at least temporarily. However, some experts believe that prices may compress further if inflation news drives rates higher.

    Buyers who can accept elevated mortgage rates may find other factors working in their favor. Inventory is now at five months of supply, suggesting a more balanced market and increased bargaining power for buyers. The typical home is selling for 2% less than the asking price, the biggest discount in two years. Homes are also taking longer to go under contract, giving buyers more negotiating room.

    Mortgage applications continue to slow, with both refinance and purchase applications down by roughly 6.6% week-over-week. New construction homes are seeing a similar trend, with applications dropping 6% compared to last year's pace. This decline in applications aligns with waning builder confidence, which fell significantly in January.