Mortgage rates drop to the 5% range for the first time since September

The average rate on the 30-year fixed rate mortgage has fallen to 5.99%, according to Mortgage News Daily.

The housing market hasn’t seen the rate with a five handle since a brief blip in early September. Before that, it was in early August.

The rate started this week at 6.21% and fell sharply Wednesday after the Federal Reserve Chairman Jerome Powell said inflation “has eased somewhat but remains elevated,” which was a shift from previous language.

That sent bond yields higher, and mortgage rates follow loosely the yield on the 10-year Treasury.

Mortgage rates peaked in October with the 30-year fixed at 7.37% and have been sliding since then. For potential homebuyers that means savings. For a consumer purchasing at $400,000 home today with a 20% down payment, the monthly payment is $293 less than it would have been in October.

Lower rates already appear to be juicing buyer interest.

Pending home sales, which measure signed contracts on existing homes, rose in December for the first time in six months. They gained 2% compared with November, according to the National Association of Realtors.

Stocks of the nation’s homebuilders have been on a tear since rates started to fall back and several are seeing 52-week highs today. The U.S. Home Construction ETF is hitting a new one year high, up over 3% on the day.

Homebuilder stocks are also reacting positively to earnings beats reported this week from PulteGroup and last week from the nation’s largest homebuilder, DR Horton. Both builders reported seeing renewed buyer interest in December, attributing that to lower mortgage rates.