Mortgage rates tick down as volatility persists

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The average rate for a 30-year fixed-rate mortgage dipped slightly this week as volatility continues in the cooling U.S. housing market.

Freddie Mac's latest Primary Mortgage Market Survey released Thursday shows the average rate for the popular 30-year fixed-rate mortgage is now at 5.13%, down from 5.22% from last week but well above the 2.86% average a year ago.

For Sale sign in front of a property in Monterey Park, Calif. on August 16, 2022. The US housing market is declining amid higher interest rates with fewer starts and more canceled deals. (Photo by FREDERIC J. BROWN/AFP via Getty Images / Getty Images)

The average for a 15-year fixed-rate note also fell, dropping to 4.55% from 4.59%. A year ago, the 15-year rate averaged 2.16%.

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"Inflation appears to be beyond its peak, which has stopped the rapid increase in mortgage rates that the housing market was experiencing earlier this year," said Sam Khater, Freddie Mac’s Chief Economist. 

For Sale sign in front of a home on March 18, 2022 in San Rafael, Calif. ((Photo by Justin Sullivan/Getty Images) / Getty Images)

"The market continues to absorb the cumulative impact of the large price and rate increases that led to a plunge in affordability," Khater continued. "As a result, over the rest of the year purchase demand likely will continue to drag, supply will modestly increase, and home price growth will decelerate."

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A slew of recent economic data shows the housing sector is slowing down after two years of pandemic-fueled demand as the Federal Reserve hikes interest rates to combat soaring inflation.

A home under construction in the Woodbridge subdivision in Sumter, S.C. (Getty Images)

Data released Thursday by the National Association of Realtors showed existing home sales dropped for the sixth straight consecutive month in July, plunging 5.9% to the lowest level May 2020.

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Recession fears are also weighing on would-be buyers who are increasingly rattled by sky-high home prices and the squeeze on their wallets from inflation. Home sale cancellations soared to a 2-year high last month.

FOX Business' Megan Henney contributed to this report.

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