The average rate on a 30-year, fixed-rate mortgage fell to another record low this week, the 14th time this year that 30-year rates have hit an all-time low.
But rising home values may be taking some of the punch out of historically low rates now.
Freddie Mac reported a 30-year fixed average of 2.71% this week. A year ago, 30-year rates averaged 3.68%. A 15-year fixed-rate mortgage averaged just 2.26% this week.
“Despite persistently low mortgage rates, home sales have hit a wall,” said Freddie Mac chief economist Sam Khater.
“While homebuyer appetite remains robust, the scarce inventory has effectively put a limit on how much higher sales can increase,” Khater said. “Unfortunately, the record low supply combined with strong demand means home prices are rapidly escalating and eroding the benefits of the low mortgage rate environment.”
Historically low rates continue to fuel the D.C. area housing market, but as Freddie Mac notes, it is also fueling a continued rise in home prices.
October home sales in Northern Virginia were up 29% from a year ago, to the highest level since 2004, according to the Northern Virginia Association of Realtors. And the average price of what sold in Northern Virginia, at almost $674,000, was up 11%.
The median price of what sold in the District in October was $675,000, up 17% from a year ago. Overall, sales were up 16%, according to Long & Foster Real Estate.
The median prices of what sold in suburban Maryland were also sharply higher than a year ago, hitting $500,000 in Montgomery County, up 14% from a year ago. Sales were up 26%.
Sales in Prince George’s County were up 5%, with prices up 13%.
Inventory across the D.C. region remains extremely tight, with new listings largely playing catch-up with the number of contracts signed to buy a home each month.