Finally, Mortgage Rates And Home Prices Are Favorable To Homebuyers
For American Homebuyers, Christmas has come early! Additionally, there are two gifts, which ought to make them happy. Lower mortgage rates, which have been declining for the past four weeks, are gift number one.
In her weekly analysis, The Real Estate Union Chief Economist Danielle Hale states, “Housing data in the week that followed the Thanksgiving holiday showed that the recent decrease in mortgage rates may already be having an impact.”
Second gift: According to Hale, home price rise “slowed noticeably” for the week ending December 3. In our weekly piece “How’s the Housing Market This Week?” we break down the most recent real estate statistics and what they signify for purchasers and sellers.
Mortgage Rates Dipped Again
It had been a bad situation not too long ago: 30-year fixed-rate mortgage interest rates had reached a 20-year high of 7.08% in late October, having more than quadrupled over the previous year.
However, rates have been falling precipitously since then, hitting 6.33% for the week ending Dec. 8 (down from 6.49% the week before), according to Freddie Mac. On a normal property, even this lone one-week reduction results in significant savings, equivalent to $185 saved each month.
However, with rates fluctuating, there might not be much time for home buyers to squander. For those intending to make a purchase, there may be some pressure to take advantage of what may only be a brief decline because, according to Hale, “many more consumers are still generally expecting rising rates rather than lower rates.”
Home Price Growth Is Tapering Off
The median cost of a home in November was around $416,000. Yes, that is high, but not even close to June’s record high of $449,000. The good news for homebuyers is that this trend is gradually slowing down, despite the fact that the cost of a home has increased by double digits year over year for the previous 49 weeks in a row.
The median listing price increased 10.3% from the same week last year to the week ending Dec. 3. Prices are therefore still higher than they were a year ago, although this marked a sharp decline from the growth rate of 12.2% from the previous week. And if the slowdown persists, before the year is through, home price growth might return to single-digit territory, providing buyers even more options
All Of The New Houses?
While homebuyers may be delighted by this unexpectedly good news on the mortgage and property price fronts, the drawback is that there won’t be as many new listings to choose from.
The number of new home sellers eager to market has decreased for 22 weeks in a row, declining 8% for the week ending December 3 compared to the same week last year. The fact that this is the smallest decline since July, however, is a bright spot.
Additionally, a startling 53% more properties are currently available for sale than they were a year ago, including both new and used listings. This increase in the total number of properties for sale is primarily due to residences remaining on the market longer. Compared to the same week last year, homebuyers had nine additional days to browse listings for the week ending December 3. Homes are staying on the market longer as buyers deliberate more, according to Hale.
Buyers May Need To Act Quickly
Although there are many positive developments for homebuyers in 2023, including reduced mortgage rates, slowing home price increases, and more options available, there are still many obstacles and uncertainties. In comparison to a year ago, “affordability continues to be a concern,” adds Hale. Homebuyers looking to take advantage of their sudden increase in purchasing power should search the Northeast and Midwest markets for reasonably priced, accessible properties.
Looking ahead, we anticipate that some of the best housing markets of 2023 will be found in midsized markets that are affordable and host a variety of domestic manufacturing, government, health care, and educational companies, adds Hale.