Economic Report: Mortgage rates slump to 2-month lows amid market turmoil

Rates for home loans fell, a boon for buyers in a brightening housing market. Read More...

Builders say they’re looking forward to an “elongated” selling season.

Rates for home loans slid to two-month lows, in line with the broader bond market, even as all eyes are trained on the housing market for signs of how the crucial spring selling season will shape up.

The 30-year, fixed-rate mortgage averaged 4.07% in the May 16 week, Freddie Mac said Thursday, down three basis points. It was the third straight weekly decline for the popular product, and put it back at its second-lowest level of 2019.

The 15-year fixed-rate mortgage averaged 3.53%, down from 3.57%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.66%, up three basis points.

Fixed-rate mortgages follow the path of the benchmark U.S. 10-year Treasury note TMUBMUSD10Y, +0.07% , which has rallied as investors pulled money out of stocks. As demand — and prices — rise, yields decline. (Here’s an earlier look at how mortgage applications jump when rates fall, and vice versa.)

See: Is the era of double-digit home price gains behind us?

The housing market hit a bump in 2018 as rising mortgage rates and higher prices for homes put them out of reach of too many people. But Americans still want to be homeowners, it seems. Sales of newly-constructed homes were higher in March, and some builders are looking forward to an “elongated” selling season for their products.

New construction still represents only about one-tenth of the housing market, though. The National Association of Realtors will report on April sales of previously-owned homes next week. One early read came last week from Glenn Kelman, CEO of Redfin Corp. RDFN, +2.66% , on a call to discuss company earnings.

“This acceleration in revenue and traffic is part of a broader trend fueled only partly by an improving housing market,” Kelman said. “At times in March and April, we’ve had as much demand as we can handle both in parts of our brokerage and in every one of our new businesses.”