US mortgage rates drop below 6% for the 1st time in nearly 4 years

The rate on a 30-year fixed mortgage dropped below 6% for the first time in nearly four years, according to new data from Freddie Mac.

Rates have been hovering around 6% this year and averaged 6.76% last February.

"For the first time in three and a half years, the 30-year fixed-rate mortgage dropped into the 5% range, falling even lower than last week's milestone," Sam Khater, Freddie Mac's chief economist, said in a statement. "This rate, combined with the improving availability of homes for sale, is meaningful and will drive more potential buyers into the market for spring homebuying season."

After the pandemic, a rapid rise in home prices coincided with stubbornly high mortgage rates, shutting out potential buyers.

Glimmers of hope have started to emerge, however. Wages are rising faster than home prices and homebuyers are scooping up their biggest discounts in years, some analysts told ABC News.

"Housing is becoming more affordable. Are we there yet? No. But we're on the right path," Ken Johnson, a real estate economist at the University of Mississippi, told ABC News.

Each percentage point decrease in a mortgage rate can save thousands or tens of thousands in additional costs each year, depending on the price of the house, according to Rocket Mortgage.

"It looks like mortgage rates are settling down," Lawrence Yun, chief economist at the National Association of Realtors (NAR), told ABC News. "That's great news for homebuyers."

A measure of housing affordability issued by NAR has improved for seven consecutive months, rising to its highest level since 2022, Yun said. The surge in home prices has slowed while income gains have accelerated, bolstering the purchasing power of homebuyers, some analysts noted.

"Incomes are growing faster than home prices," Johnson said.