According to real estate agency Redfin, the home market may be turning around for dissatisfied would-be buyers as mortgage rates fall and listings grow.
According to Fannie Mae, the interest rate on a 30-year fixed mortgage has dropped to 7.03%. It reached a high of little over 8% in early October. This was a 23-year high.
According to Redfin, mortgage applications are up 15% since early November, when they hit a 28-year low, while new house listings are up 7% from last year, when interest rates were skyrocketing.
As a result, the number of applications to purchase a property is increasing.
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But if the housing market is thawing, it’s not happening very quickly. In a news release issued Thursday, Fannie Mae said there are already signs that the growth in applications is slowing down.
“Although these lower rates remain a welcome relief, it is clear they will have to further drop to more consistently reinvigorate demand,” it said.
Mortgage rates have lately fallen as investors become confident that the Federal Reserve has stopped rising interest rates for the time being. The Fed hiked its target rate from slightly over zero to a range of 5.25% to 5.5% between March 2022 and July 2023. That was a significant shift, and it made getting a mortgage considerably more expensive.
It also meant that homeowners who had owned their houses for a few years and had a mortgage in the 3% to 4% level didn’t want to sell. The scarcity of available properties lead to significant price rises.
A month or two of progress can only get you so far. According to Redfin, the median sale price of a property in the United States increased 4.1% in the year ending December 3 to $364,166. However, due to the rise in mortgage rates, the typical monthly mortgage payment increased by 15% to $2,561.
This is somewhat higher than two months ago, but it is still more than double the average payment from three years ago. The quantity of available properties on the market is fewer than at this time last year.
According to experts, the only thing that will bring about a long-term shift is an increase in the quantity of properties for sale, which Redfin believes is beginning to happen in some regions.
According to Redfin, prices are falling in five of the 50 major U.S. metro regions, including Portland, Oregon, and Houston. It believes that pattern will expand to other locations in 2024, even if mortgage rates continue to fall.
Overall, the business predicts 4.3 million houses to be sold in 2024, a 5% rise from 2023, and mortgage rates to fall to 6.6% by the end of the year.
