Apache is functioning normally

Average mortgage rates ebbed this week — a welcome change, but not enough to give home buyers much relief.

The average rate on the 30-year fixed-rate mortgage fell to 6.89% in the week ending June 6, according to rates provided to NerdWallet by Zillow. It was a decrease of 13 basis points from the previous week. (A basis point is one one-hundredth of a percentage point.)

The drop brings the 30-year fixed rate to about where it was two weeks ago and slightly under May’s monthly average of 7.01%.

National home sale prices rose 5.3% year over year in April and were up 1.1% from the prior month, CoreLogic, a global property analytics company, reported this week.

Any price increase is tough on home buyers, but the recent gains are softer than the year-over-year price jumps in the last few years. CoreLogic projects home price growth to slow to 3.4% by next spring.

The price softening reflects buyers’ response to high mortgage rates and anticipation that rates may eventually fall, CoreLogic chief economist Selma Hepp said in a June 4 press release.

“Also, the price cooling is more pronounced in markets where there has been an influx of inventory and/or new construction, as well as those where additional homeownership costs (such as insurance, taxes and HOA fees) have risen relatively faster,” she said.

About 605,000 single-family homes are on the market — 39% more than last year at this time, Mike Simonsen, founder and president of Altos Research, a real estate analytics firm, said in a June 3 video.

“Most of the country has over 30% more homes on the market now,” he said. “But a few states — Texas, California, Florida, Georgia, Arizona — are driving the bulk of the inventory increase for the country. So inventory is up everywhere, just some places more than others.”

Simonsen predicts that rising inventory will continue as long as rates stay high. Inventory will fall if rates go down and more buyers enter the market.

Lower inflation could lead to lower interest rates. The two big things to watch for next week are the releases of the U.S. Bureau of Labor Statistics’ consumer price index, which measures inflation, and the Federal Reserve’s Federal Open Market Committee’s monetary policy statement. Both will happen on June 12.

The Fed does not plan to cut the federal funds rate — a rate that influences mortgage rates — until inflation is “moving sustainably toward 2%.”

Market watchers don’t expect a rate cut next week. As of June 6, the chance of the Fed keeping the federal funds rate unchanged was more than 99%, according to the CME FedWatch Tool.