Mortgage Interest Rates

The average 30-year fixed-rate mortgage declined in the first week of December to 6.69%, down from 6.81% at the end of November. Prior to the decline, mortgage interest rates had continued to rise for several weeks. December saw the first week-to-week decline since mortgage interest rates had fallen in September to the lowest levels in the past two years.

Why are Interest Rates Continuing to Rise?

The recent rate increases coincided with heightened volatility in the 10-year Treasury yield, which jumped from 3.72% in September to 3.99% in October. This spike followed a weaker-than-expected labor report driven by the disruptions from two hurricanes, as well as the Boeing strike.

However, the primary reason interest rates have been on the rise pertains to the uncertainty surrounding the presidential election. Although the election is now complete, there continue to be growing concerns over budget deficits.

When Will Interest Rates Decline?

NAHB had been forecasting sustained, sub-6% mortgage interest rates occurring in the second quarter of 2025. However, NAHB will be revising its interest rate outlook as the new Trump administration continues to form and its fiscal policy position comes into focus.

Faced with record-high prices for homes and stubbornly high interest rates, many would-be buyers will continue to stay on the sidelines until housing affordability conditions improve.