At a time when the U.S. housing market is still being held back by high borrowing costs and rising prices, the average rate on a 30-year U.S. mortgage dropped to its lowest level since early May, which is positive for potential purchasers.
Freddie Mac, a mortgage buyer, reported on Thursday that the long-term rate dropped from 6.81% to 6.77% last week. The rate averaged 6.86% a year ago.
15-year fixed-rate mortgages, which are common among homeowners refinancing their house loans, also saw a decrease in borrowing costs. Last week, the average rate was 5.96%; this week, it fell to 5.89%. According to Freddie Mac, it was 6.16% a year ago.
Home sales in the United States fell to their lowest level in almost 30 years last year. They have been modest so far this year because high mortgage rates and steadily rising, albeit slower, property prices have deterred many potential homeowners.
The Commerce Department said Thursday that the U.S. economy contracted at an annual rate of 0.5% between January and March, which was a surprising decline from previous projections.
A spike in imports hurt first-quarter GDP as American individuals and businesses hurried to purchase items from overseas before Trump could apply taxes. According to earlier estimates from the Commerce Department, the economy shrank by 0.2% during the first quarter. Economists had predicted that the department’s third and final estimate would remain unchanged.
Gross domestic product, or the country’s output of goods and services, fell from January to March, marking the first contraction in the economy in three years and reversing a 2.4% growth in the last three months of 2024. The GDP shrank by over 4.7 percentage points as a result of imports, which grew 37.9%, the fastest since 2020.
