By Makailah Gause
NEW YORK (Reuters) - The average rate on the popular U.S. 30-year fixed-rate mortgage edged up to 6.78% for the week ending July 25, leaving it about half a percentage point below its peak earlier this year, as buyers still show signs of hesitancy to enter the market.
That was up slightly from 6.77% in the prior week, mortgage finance agency Freddie Mac said on Thursday.
It averaged 6.81% during the same period a year ago.
"Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data," Chief Economist Sam Khater said in a statement.
Existing home sales fell 5.4% in June - the fourth straight monthly drop - to the slowest rate since December, the National Association of Realtors reported earlier this week.
Many home owners are continuing to hold on to properties purchased with mortgages with a much lower rate, as buying a new home will likely mean a higher rate. Still, housing inventory jumped to the highest in nearly four years, leading NAR Chief Economist Lawrence Yun to conclude: “We’re seeing a slow shift from a seller’s market to a buyer’s market.”
"As a seller, I am glad that people want to buy my house, but as a buyer I am concerned about the fact that we will be getting into bidding wars," said Gaurav Khanna, a prospective home buyer and economics professor at University of California at San Diego. "It's pretty competitive."
Rising home owners insurance premiums are also hurting housing affordability, but many economists expect home borrowing costs to ease further later this year as the Federal Reserve shifts to interest rate cuts as inflation eases.