In the latest data from the Mortgage Bankers Association (MBA), the mortgage applications index increased by 2.5% last week. Notably, the average rate for the 30-year loan experienced a slight drop to 7.61%, the most significant weekly decline since mid-2022. Joel Kan, MBA's deputy chief economist, attributed this rate decrease to factors such as the U.S. Treasury's issuance update, the Federal Reserve's dovish tone in the November Federal Open Market Committee (FOMC) statement, and data indicating a slower job market.

The Federal Reserve's persistent tightening campaign has cooled the interest rate-sensitive housing market. While officials suggest another rate hike this year, some economists believe the central bank is done raising interest rates. High mortgage rates are impacting consumer demand and limiting inventory, with the total number of homes for sale falling by 4% in September compared to the previous year. The available home supply remains down 45.1% from pre-pandemic levels in early 2020. This data underscores the intricate connection between economic policies, mortgage rates, and their profound effects on the real estate market.