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Lower mortgage rates aren't likely to lift slowing home sales, economists say

|About: SPDR Homebuilders ETF (XHB)|By:, SA News Editor

U.S. mortgage rates, at their lowest level in almost three years, aren't likely to bolster the sluggish home-sales market in the long term, economists said.

They might provide a modest boost to sales at the end of the year, but aren't likely to provide a fix to a market struggling with steep home prices and limited starter-home inventory in many markets.

“It’s a bit of an added lease on life for this housing cycle. I don’t think it’s going to dramatically change anything,” said Issi Romem, senior director of housing and urban economics at Zillow.

Average rates for a 30-year mortgage fell to 3.6% this week, their lowest level since November 2016, from 3.75% last week, Freddie Mac said on Thursday.

That's given a lift to refinancing activity, though. Applications for refinancing increased 12% in the week ending Aug. 7 vs the prior week; purchase applications fell 2% in the same period, the Mortgage Bankers Association reported.

Homebuilder ETFs: XHB, ITB, PKB, NAIL, HOML, HOMZ

Mortgage-related ETFs: MORL, REM, MORT, DMO, TSI

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