Written by David Dodge

According to the MND rate index, the interest rate on a 30-year fixed-rate conventional mortgage fell to 6.80% today (source: St. Louis Real Estate News). This marks the lowest rate in over six months, since January 9th of this year when rates were at 6.80% as well. This drop in rates comes as the Federal Open Market Committee (FOMC) is meeting today and tomorrow.

Federal Reserve Meeting and Interest Rates

The expectation for the Federal Reserve's meeting is that they will likely keep interest rates unchanged at their current level of 5.25% to 5.50%, which is a 23-year high (source: St. Louis Real Estate News). This expectation is supported by the CME Group's FedWatch Tool, which assigns a 97% probability to rates remaining steady during this meeting (source: St. Louis Real Estate News).

Impact on the Housing Market

A lower mortgage rate can be a positive sign for the housing market, as it can make homes more affordable for buyers. This could lead to increased demand for homes and higher home prices. However, other factors, such as the overall economy and job growth, can also affect the housing market.

Homeownership Rates

According to a recent report by the National Association of Realtors (NAR), the homeownership rate in the United States is currently at 65.5% (source: National Association of Realtors). This is down from a peak of 69.2% in 2004, but it is still higher than the historical average. Homeownership rates tend to be higher in the Midwest than in other parts of the country.

Rental Vacancy Rates

The rental vacancy rate is the percentage of rental units that are vacant and available for rent. A low rental vacancy rate can indicate that there is a strong demand for rental housing. According to a recent report by Apartment List, the national rental vacancy rate is currently at 5.9% (source: Apartment List). This is down from a high of 8.1% in 2019. Rental vacancy rates tend to be lower in the Midwest than in other parts of the country.

Conclusion

The recent drop in mortgage interest rates is a positive sign for the housing market. However, other factors, such as the overall economy and job growth, can also affect the market. Homeownership rates are still higher than the historical average, and rental vacancy rates are low. These factors suggest that the housing market is in a relatively healthy state.