Mortgage rates have made a noticeable decline from peaks in the high-7% range last fall, and the housing market is abuzz in the wake of this week’s Federal Reserve benchmark rate cut.
Are buyers and sellers ready for a little magic?
Some real estate experts say there’s a “magic number” for 30-year rates at which the housing market really heats up. Home sales have been lethargic: They’re down 4.2% from where they were a year ago, according to newly released data from the National Association of Realtors. And the market wasn’t exactly great a year ago, when San Francisco home sales hit a record low. Redfin data from this week revealed home sales and pending sales last month were at their lowest rates since the early days of the pandemic.
But another number is on its way down: Average 30-year mortgage rates. Freddie Mac data indicated average rates were at 6.09% on Friday following Wednesday’s Fed rate cut.
The so-called “magic number” to get buyers and sellers excited is 6%, according to a recent article in Fortune that cited “Shark Tank” star and real estate company founder Barbara Corcoran and other industry pros.
“Historically, 6% is a very good rate,” said Nadia Evangelou, senior economist and director of real estate research for the National Association of Realtors. Mortgage rates soared above 18% in the early 1980s, and last fall’s 7.79% peak was the highest we’ve seen in the past 20 years.
But with 3% rates a very recent memory, and prices continuing to rise, has that 6% number lost a bit of its sparkle?
Nikki Edwards, a real estate agent in the Bay Area, said people shopping for a home have been excited about the descent toward 6%. For well-qualified buyers, it’s not unthinkable to get below that number. She said she’s had clients lock in at 5.875% and even 5.65%.DANIELLE LINDNER