States Where Mortgage Rates Are the Lowest

Mortgage rates are seeing a modest decline, and a Newsweek map shows that 14 states are offering rates for 30-year mortgages at 7.5 percent, up from just one state with mortgage rates that low last week.

Georgia, Illinois, Indiana, Kansas, Maryland, Michigan, New Jersey, New York, North Carolina, North Dakota, Ohio, South Carolina, Tennessee and West Virginia all have 30-year mortgage rates at 7.5 percent for homebuyers with a credit score of 700 to 719, according to data from the Consumer Financial Protection Bureau. Last week, Illinois was the only state offering a 7.5 percent rate.

The change represents a modest drop as the average mortgage rate decreased from a high of 7.61 percent in the first week of November, though it's still around the highest level since November 2000, according to the Mortgage Bankers Association.

Mortgage applications fell 0.3 percent the week of November 24, indicating homebuyers are still wary of getting into the market. This compares to a 3 percent drop in applications for the week of November 17.

In terms of home sales, the U.S. Census Bureau and the Department of Housing and Urban Development reported that sales of new single-family houses in October 2023 were at a seasonally adjusted annual number of 679,000, which is 5.6 percent below the revised September number of 719,000 but 17.7 percent above the October 2022 estimate of 577,000.

Alaska, Arizona, Colorado, Hawaii, Idaho, Maine, Minnesota, New Mexico, Oregon, Rhode Island, Texas, Washington and Wisconsin are seeing the highest rates. Hawaii and Alaska have mortgage rates at 7.75 percent, while the others are at 7.63 percent.

What Will Next Year Bring?

Ellen Zentner, Morgan Stanley's chief U.S. economist, predicted that housing market affordability will see improvement in 2024. An increase in inventory due to stronger homebuilding activity is expected to balance out the rise in demand.

"Home prices should see modest declines as growth in inventory offsets the increase in demand," Zentner said in a mid-November podcast. "By 2025, with lower rates, existing home sales should rise more convincingly."

Despite a challenging year for the housing market, with mortgage rates reaching 8 percent in October, recent declines in mortgage rates, driven by expectations of the Federal Reserve pivoting to rate cuts, have injected a dose of optimism.

Morgan Stanley forecasts rate cuts to begin by mid-2024 as inflation continues to decelerate, potentially leading to a more balanced and accessible housing market in the coming years.