U.S. mortgage rates decline, inventory issues still remain

Mortgage rates reverse course and begin to decline after rising for three consecutive weeks. Yahoo Finance reporter Dani Romero highlights where the housing market continues to see its toughest challenges.

Video Transcript

- Homebuyers looking at some relief from mortgage rates as affordability challenges weigh on prospective buyers. Here to break it all down is Yahoo Finance's Dani Romero. Dani, those new numbers out earlier today showing some signs of relief, but still high.

DANI ROMERO: Yeah. Don't expect a summer breeze. Rates are sitting above 6.5% for most of the spring season. And if we take a look at that 30-year fixed mortgage rate, it dipped to 6.71% from 6.79% last week. But this comes as inventory remains tight, the cost of homeownership is up, and rate trapped homeowners aren't moving, and they're not listing their homes.

Demand for mortgage applications fell for four consecutive weeks. And if we take a look at some of the reasons for why people are not buying, Redfin says, the average monthly payment is about $2,600. That's about 41% more than it was a year ago, so very costly. So you could say that this is a seller's market. They could have the upper hand right now. But that's really not moving the needle when it comes to inventory.

Well, I mean, let's talk about that inventory. Because sure, mortgage rates are high. I mean, that's discouraging some buyers. There some, some buyers who are in the market saying, I still want to get a home, and yet I can't find the right one. And by the way, prices are high because they're so few.

DANI ROMERO: Yes. And so inventory grew 0.7% last week, that's according to Altos research. And they expect it to grow around 3% for the next three weeks. So that could mean fewer concessions for sellers, not a great sign. But also fewer price cuts, which will also benefit a seller right now. So there is some positivity on the inventory side of things, especially that it is a major headwind right now.

- We still have a ways to go there. Dani Romero, great stuff. Thanks