The 30-year fixed-rate mortgage fell to 3.6 percent, its lowest level since November 2016, according to Freddie Mac.
“There is a tug of war in the financial markets between weaker business sentiment and consumer sentiment,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Business sentiment is declining on negative trade and manufacturing headlines, but consumer sentiment remains buoyed by a strong labor market and low rates that will continue to drive home sales into the fall.”
The drop also comes as the yield on the 10-year Treasury has been falling amid an escalation in the trade war between the U.S. and China.
Last year at this time, the 30-year fixed-rate mortgage averaged 4.59 percent. Last week, the rate averaged 3.75 percent.
The housing market has still been struggling to attract prospective buyers, despite the drop in rates and a strong labor market – as the U.S. unemployment rate hovers at a multi-decade low.
Existing home sales fell more than expected in June, down 1.7 percent, as affordability remained a challenge, according to the National Association of Realtors.
A lack of inventory pushed prices up 4.3 percent when compared with the same period a year ago – reaching an all-time high of $285,700.
New home sales, however, picked up in June, according to the U.S. Department of Commerce, following two months of declines.The median sales price of a new home in June was $310,400.