rewrite this title Weekly Mortgage Rates Drop as Home Sales Stall  – NerdWallet

Mortgage rates dipped below 7% this week as the housing market continued to snuggle into its winter hibernation.

The average rate on the 30-year fixed-rate mortgage fell 12 basis points to 6.94% in the week ending Jan. 23, according to rates provided to NerdWallet by Zillow. A basis point is one-one hundredth of a percentage point. The previous week had been the first time that the 30-year rate had inched above 7% since May.

Mortgage rates dropped as investors digested encouraging news on inflation. The December consumer price index, released Jan. 15, showed that core inflation came in a smidgen slower than investors had expected.

Even with this week’s modest rate drop, you can’t ignore the fact that mortgage rates have lingered around 7% since Christmas. Those high interest rates have deterred buyers during a time of year that usually features slow sales anyway. The middle of January counted 10% fewer home sales than the same period a year before, said Mike Simonsen, founder of real estate analytics firm Altos Research, in a commentary on YouTube.

“That’s a very slow start to the new year,” Simonsen said, later adding, “It’s pretty obvious that home purchases are on ice until mortgage rates thaw a bit.”

Believe it or not, positive news for home buyers lurks in the housing data. A slowdown in sales means more houses will pop up on your search page. As the inventory of for-sale homes increases, sellers will compete on price, and buyers will have more properties to choose from. Buyers are entering the year with optimism, and maybe the feeling is warranted.

“For buyers who have been frustrated with the lack of options in the market, we expect to see inventory go up by more than 11%” in 2025, said Danielle Hale, chief economist for Realtor.com, in a market commentary on YouTube. “That’s going to help nudge the market from seller-friendly to more balanced for the first time in nine years.”

She added that home prices rise more slowly in a balanced market, benefiting buyers.

There are two ways for existing housing inventory to grow. In the first way, a bunch of sellers list their homes around the same time, creating a glut. In the second way, buyers sit on the sidelines as new listings pile up. We’re witnessing the second way.

“Demand is weak,” Simonsen said. “There’s no upward pressure on sales prices.” He added: “So the takeaway on home prices is that everything is under pressure with mortgage rates over 7%.”