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At long last, the housing market might be thawing just as we head into what’s usually a seasonal deep freeze.
Mortgage rates plunged for the sixth week in a row, to 7.03% for a 30-year fixed home loan in the week ending Dec. 7, according to averages tabulated by Freddie Mac. This welcome news comes on the heels of rates recently reaching a high in late October not seen in 23 years.
“The 30-year fixed-rate mortgage averaged near 7% this week, down from nearly 7.8% just six weeks ago,” says Sam Khater, Freddie Mac’s chief economist.
This sharp drop could even portend a rate in the 6% range—a number not seen since August—next year.
In addition to these glad tidings, a fresh batch of new listings has recently come on the market.
Does all this mean there’s finally something major to celebrate as the holiday season kicks into high gear? We’ll explain what the latest real estate housing data adds up to for buyers and sellers in this newest installment of “How’s the Housing Market This Week?”
How falling mortgage rates affect home prices
Although this drop in mortgage rates provides buyers some welcome relief on the affordability front, it could also increase the competition they face for limited listings.
“The recent decline in mortgage rates could bring buyers into the market,” says Realtor.com® economic data manager Hannah Jones in her recent analysis. But this, in turn, might “apply additional upward pressure on home prices unless seller activity increases in kind.”
Indeed, for the week ending Dec. 2, median home prices edged up by 1.2% over last year, “maintaining a consistent growth rate from the preceding two weeks,” adds Jones.
Whether prices might shoot up in a more significant way remains to be seen.
Listing pages are growing
Only one thing can break the ongoing inventory crunch that’s keeping home prices at unfriendly highs: fresh listings.
And in the good news column, new listings were up by 5.6% for the week ending Dec. 2 compared with last year.
This welcome wave of new homes for sale could mean that sellers, once frozen by the mortgage “lock-in” effect—meaning they weren’t willing to give up their low-rate mortgage—might be finally breaking loose.
“Seller activity remained above the previous year’s level again this week, offering some hope to buyers trying to secure a home before the end of the year,” says Jones.
Buyers have even more to celebrate, with overall active inventory (a combination of existing and fresh listings) increasing by 3.1% above year-ago levels.
The housing inventory outlook
Overall inventory generally dips in the colder months as buyers and sellers go into hibernation mode.
“Housing activity remained strong relative to a year ago this week, but generally continued to ease according to typical seasonal trends,” says Jones.
And while Jones explains that “the pace of new listings is still 16.9% below typical pre-pandemic levels,” next year might see that percentage shrink.
“We expect mortgage rates to soften in the new year, which may help bring sellers back into the market and bolster home supply,” says Jones.
Keep an eye on local real estate
Examining national trends is all well and good, but what’s going on in your neighborhood might be paramount in the new year.
“Looking into 2024, we expect housing activity to vary market to market,” says Jones. “Generally, affordable Northeast and Midwest markets will likely see strong sales and price growth in 2024.”
The sun is also expected to shine on the West Coast markets again as they “rebound from their significant slowdown in 2023,” says Jones.
When buyers across the nation see a home that fits their wish list, they may want to act quickly. For the week ending Dec. 2, homes were snatched up three days faster than the same time last year, marking the ninth week since July 2022 of faster home sales year over year. (In November, homes spent an average of 52 days on the market.)
“As for-sale inventory remains scarce, buyer demand is funneled into fewer homes for sale, keeping time on market quick relative to last year,” concludes Jones.
In other words, homebuyers had better hurry up.
The post Mortgage Rates Just Dropped to Near 7%—but You’d Better Hurry Up appeared first on Real Estate News & Insights | realtor.com®.
