Yahoo Finance Live examines the state of the mortgage rate landscape as home prices continue to fall.
DAVE BRIGGS: Much like inventory levels good, housing news in very short supply as of late. Home buyers got just that today, though, with mortgage rates falling yet again. Freddie Mac now says the average 30-year fixed sits at 6.49%. That's down from 6.58 one week ago. Rates have now seen the biggest three-week drop since 2008. The 30-year was north of 7 on November 10. Of course, this all depends upon your perspective. Rates were still more than double the 3.11 of one year ago.
High mortgage rates have put potential buyers off of their searches. And it's impacting mortgage employees, as you might expect. Wells Fargo cutting hundreds of its mortgage workers today, according to Bloomberg. The bank has already let go of thousands of its employees this year. And it's not the only one. JPMorgan cut hundreds of home lending staff back in June. The cuts all an impact to the Fed's fight to tame inflation.
And Seana, this is a lot like much of the layoffs we've seen even in the tech sector, to draw a parallel. They overhired during the pandemic because, of course, they had to. And now they're really trimming the fat from being bloated during COVID.
SEANA SMITH: Yeah, and that's very important to point out. I think the question here is how long it's going to take for the real estate market to correct and what this means for home prices because, yes, mortgage rates, they've come back a bit. They're still extremely high, especially compared to what we saw just a year ago, two years ago. Home prices have also remained high, still up 10% in the month of September from a year ago.
So we need to see a little bit more of a correction there in order to see that demand really return to the market. Pantheon was out with a note earlier this week saying that they expect existing home prices to drop by about 20% from their June peak levels. Goldman was out. They revised their outlook for home prices from roughly flat next year to down 4%.
And we see affordability a massive issue. And that's affecting where people are buying, where people are looking. There was a Redfin report out saying that about a quarter of home buyers are now looking at places, metro areas that they wouldn't necessarily have considered in the past because they want to find somewhere that's affordable and somewhere that makes sense for their family. Now, given the high home prices and also just inflation, really, every aspect of their life has been getting more expensive.
DAVE BRIGGS: Yeah, and basically every number has been negative. Pending home sales down about 5%. Existing home sales, I think, 6%. But, a big but here is the number you gave, 10% up over a year ago. And yes, I think they'll drop, and people I've talked to, another 3%, 4%, or 5% in the next year. But that still leaves you with a pretty healthy gain, unless, of course, you bought at the peak of the pandemic. But you're probably not selling your home if, in fact, that's the case. So I don't see that 20% correction ahead, but we shall see.
SEANA SMITH: Yeah, because you locked in much lower rates.
DAVE BRIGGS: Because rates, again, are falling pretty precipitously.