The housing market is getting a much-needed lift from falling long-term interest rates. But low rates may only be a temporary and artificial power to the housing market. As recession concerns loom, interest rates have fallen to a level that’s now stimulative for the U.S. housing sector. The average 30-year mortgage rate is around 3.6%, according to Freddie Mac data. This is the lowest level since November 2016.
“We do expect lower rates to positively affect housing activity in the quarters ahead. Some leading indicators for housing, such as builder and consumer sentiment, have improved recently,” Credit Suisse wrote in a recent research note. ”We expect an forthcoming return to moderate but positive growth in the housing market. A recovery in housing is likely to provide a welcome boost to growth amid a global manufacturing slump.”
Since 2018, the 30-year mortgage rate has fallen more than 100 basis points. Credit Suisse estimates the recent move in rates would increase home sales by at least 5.0% in the next few months, pushing sales to 5.5 million — the highest since the first quarter of 2018.
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