Average long-term U.S. mortgage rate at lowest level in over 4 months

The average long-term U.S. mortgage rate fell to its lowest level in more than four months, giving some relief to homebuyers faced with higher prices for just about everything, including homes.

Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate inched down to 6.13% from 6.15% last week. A year ago the average rate was 3.55%.

The average long-term rate reached a two-decade high of 7.08% in late October and early November as the Federal Reserve continued to raise its key lending rate in a bid to cool the economy and tame inflation.

The big rise in mortgage rates during the past year has throttled the housing market, with sales of existing homes falling for 11 straight months to the lowest level in more than a decade.

The National Association of Realtors said last week that existing U.S. home sales totaled 5.03 million last year, a 17.8% decline from 2021. That is the weakest year for home sales since 2014 and the biggest annual decline since 2008, during the housing crisis of the late 2000s.

Though home prices have retreated as demand has declined, they are still more than 10% higher than a year ago. Higher prices and a doubling of mortgage rates have made homebuying much less affordable for many people, but recent rate declines could give some homebuyers new hope.

At its final meeting of 2022, the Federal Reserve raised its rate 0.50 percentage points, its seventh increase last year. That pushed the central bank's key rate to a range of 4.25% to 4.5%.