The average long-term U.S. mortgage rate fell for the fifth week in a row, more good news for prospective homebuyers grappling with a housing market that has grown  unaffordable.

The latest decline brought the average rate on a 30-year mortgage down to 7.22% from 7.29% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.49%.

The average rate on a 30-year mortgage is now at the lowest level it’s been in 10 weeks, when it was 7.19%.

“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates,” said Sam Khater, Freddie Mac’s chief economist. “The current trajectory of rates is an encouraging development for potential homebuyers, with purchase application activity recently rising to the same level as mid-September when rates were similar to today’s levels.”

While the recent string of rate declines are welcome news for would-be homebuyers, the average rate on a 30-year home loan remains sharply higher than just two years ago, when it was around 3%.

Higher rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market already out of reach for many Americans. They also discourage homeowners who locked in rock-bottom rates two years ago from selling.

The average rate on a 30-year home loan climbed above 6% in September 2022 and has remained above that threshold since. In late October, it climbed to 7.79%, the highest level on records going back to late 2000. That helped push up the median monthly payment listed on home loan applications in October to $2,199, a 9.3% increase from a year earlier, the Mortgage Bankers Association reported Thursday.

Jim Barry, CEO of Artisan Mortgage, a mortgage broker in Bay Shore, said Long Island is suffering from a shortage of homes for sale because homeowners who locked in rates around 3% aren't willing to sell their homes and accept a higher housing payment. 

The drop in rates over the past few weeks hasn't changed that dynamic, he said. 

"I don't think it's going to change the market all the much yet until rates get to a point where we're inducing some of these sellers to list," Barry said. 

Nationwide, the elevated mortgage rates and a near-historic-low supply of homes on the market have held back the housing market this year. Sales of previously occupied U.S. homes, which slumped in October to their slowest pace in more than 13 years and are down 20.2% through the first 10 months of the year versus the same period in 2022.

With Jonathan LaMantia

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