The average 30-year mortgage rate in the United States fell below 6% for the first time in three and a half years! Economists pour cold water: the shortage of housing supply still hinders the recovery of the real estate market.

The average interest rate for a 30-year mortgage in the United States fell below 6% this week for the first time in three and a half years. However, economists say this may just be a temporary phenomenon and that unless housing supply increases, a decrease in interest rates alone will not be enough to significantly boost housing demand. Data released by Freddie Mac on Thursday showed that the average interest rate for a 30-year fixed mortgage was 5.98%, the lowest level since September 2022, down from 6.01% last week and significantly lower than the 6.76% from the same period last year. However, Jiayi Xu, an economist at Realtor.com, stated, "The drop in mortgage rates this week is due to market fluctuations rather than fundamental economic data, so more supportive economic data is needed to establish a continued trend." Others point out that the shortage of housing inventory will continue to pose a challenge for buyers. Economists and policymakers also note that the shortage of available properties (especially first-time homes) continues to weigh on the housing market. Inventory of existing homes is also significantly lower than pre-pandemic levels. The U.S. housing market has become a sensitive political issue. Due to limited supply, high interest rates, and rising construction costs, the U.S. real estate market has been struggling, with existing home sales falling to a two-year low in January. The Federal Housing Finance Agency, which oversees mortgage finance giants Freddie Mac and Fannie Mae, stated on Tuesday that U.S. house prices rose 1.8% year-on-year in December, a decrease from the 2.1% increase in November. President Trump is facing pressure to address the issue of living costs before the November mid-term elections, and has proposed several measures aimed at increasing the affordability of homeownership. Last month, Trump ordered the Federal Housing Finance Agency to purchase $200 billion in mortgage-backed securities to help lower mortgage costs. Economists have expressed skepticism about whether these mortgage purchases will significantly improve housing affordability. Minutes from the Federal Reserve's policy meeting on January 27-28 described a situation where a New York Fed official stated that the government's bond purchase program had led to a "significant decline in mortgage-backed securities yields." However, the minutes noted that this was unlikely to substantially boost mortgage refinancing, as current mortgage rates are much higher than the weighted average rate of outstanding mortgages; many homeowners have rates lower than 5%, creating a phenomenon known as "rate lock." Nevertheless, some banking officials and market observers have stated that the drop in 30-year mortgage rates below 6% is a significant psychological threshold that may prompt some sellers to list their homes for sale and boost the confidence of potential buyers entering the market during the traditional peak season. With the decline in 30-year mortgage rates, refinancing activity has increased. Kara Ng, an economist at the real estate platform Zillow, stated, "Just this news alone could prompt many buyers who were previously on the sidelines to reevaluate the housing market." Matt Vernon, head of consumer loans at Bank of America Corp, expects the market changes to be gradual. He said, "In many cases, life events can drive decisions more than rates themselves, but lower rates might be the push that some buyers and existing homeowners have been waiting for." He added that mortgage applications at Bank of America Corp have increased by nearly 22% year-on-year. It is worth noting that amidst the continued downturn in the U.S. real estate market, comments from home improvement retailer Lowe's Companies, Inc. (LOW.US) regarding rates and other pressures weighing on home sales have dragged down numerous homebuilders and other real estate-related companies' stock prices collectively on Wednesday, with several stocks becoming the biggest percentage decliners in the S&P 500 index that day, contrasting with a 0.8% gain in the index. On Wednesday, Lowe's Companies, Inc. fell 5.6%, Lennar Corporation (LEN.US) fell 4.9%, PulteGroup, Inc. (PHM.US) fell 4.7%, D.R. Horton, Inc. (DHI.US) fell 4.0%, and building materials company Builders FirstSource (BLDR.US) fell 6.4%. In addition, the S&P 1500 homebuilding index dropped 3.7%, hitting a three-week low; and the Philadelphia Housing Industry Index fell 3%. Lowe's Companies, Inc. gave guidance for full-year sales and earnings below market expectations. CEO Marvin Ellison stated on a conference call on Wednesday that consumer confidence is "subdued" due to "inflation pressures and overall economic uncertainty." He noted that "ongoing lock effects still exist, putting pressure on housing turnover and new home starts." Prior to this, Home Depot, Inc.'s Chief Financial Officer Richard McPhail stated on Tuesday that U.S. consumers have been in what he called a "frozen housing environment" since 2023, with no clear signs of improvement.