Housing market demand continues to tumble even as mortgage rates dip, says Freddie Mac

• Housing market demand continues to tumble even as mortgage rates have dipped, Freddie Mac said.
• The 30-year fixed rate fell to 5.30% for the week ending Thursday from 5.54%.

The housing market is still seeing demand crumble even as borrow costs have eased recently, according to Freddie Mac.

The 30-year fixed rate mortgage slipped to 5.30% for the week ending July 28 from 5.54% last week. The 15-year fixed rate fell to 4.58% form 4.75%. The declines follow a dip in Treasury yields, which have pulled back amid growing fears of a recession.

"Purchase demand continues to tumble as the cumulative impact of higher rates, elevated home prices, increased recession risk, and declining consumer confidence take a toll on homebuyers," said Freddie Mac Chief Economist Sam Khater.

"It's clear that over the past two years, the combination of the pandemic, record low mortgage rates, and the opportunity to work remotely spurred greater demand. Now, as the market adjusts to a higher rate environment, we are seeing a period of deflated sales activity until the market normalizes."

Meanwhile, mortgage applications fell 1.8 % last week from the prior week to the lowest level in 22 years, according to data from the Mortgage Bankers Association on Wednesday.

Fed chair Jerome Powell also acknowledged on Wednesday that activity in the housing sector has weakened, while the central bank raised interest rates another 75 basis points.

Pantheon Macroeconomics warned investors in a note last week that demand would "crater" because most single-family home prices are still bloated.