The year started off with some positive signs for the housing market, as Freddie Mac reports that the 30-year fixed rate mortgage (FRM) fell for the second straight week, falling to 6.15% for the week ending January 19, a down 18 basis points from last week’s reading of 6.33%.
Also this week, the 15-year FRM averaged 5.28%, down from last week when it averaged 5.52%. A year ago at this time, the 15-year ORB averaged just 2.79%.
“As inflation continues to ease, mortgage rates fell again this week,” said Sam Khater, chief economist at Freddie Mac. “Rates are at their lowest levels since September last year, boosting both homebuyer demand and sentiment among homebuilders. Falling rates are giving the housing market a much-needed boost, but housing supply remains an ongoing concern.”
And as mortgage rates fell, the Mortgage Bankers Association (MBA) reported an increase in overall mortgage application volume, with app volume up 27.9% week-over-week, according to the MBA’s Weekly Mortgage Applications Survey for the week ending January 13, 2023 .
“The people who started searching homes online and scheduling home visits in late 2022 are now turning into real homebuyers,” said Redfin deputy chief economist Taylor Marr. “Low competition, falling mortgage rates and concessions from sellers are driving some buyers back to the market. That helps keep national home prices high, which is a bright spot for sellers. But many buyers are still on the sidelines and demand could fall again if inflation falls slower than expected or if mortgage rates rise again.”
Redfin also reported that during the week ending Jan. 13, mortgage buying apps were up 25% from the previous week, seasonally adjusted, but still down 35% from a year earlier. Google searches for “Homes for Sale” were up about 30% from their November lows during the week ending Jan. 14, but down about 26% from a year earlier. Median home sales price was $350,000, up 0.9% year-over-year
“For people thinking about selling their homes, current market conditions may make them wait,” notes Realtor.com economist Jiayi Xu. “Recent data shows that in December, home sellers faced increased competition from other potential sellers, a longer time to market and a higher likelihood of having to lower their asking price. Homeowners looking to sell and buy at the same time, who likely have a good interest rate on their current mortgage, may be hesitant to list their homes for sale and are faced with today’s high mortgage rates and home prices. Some are waiting to see if the market improves before putting their homes up for sale.”
Another positive sign for the market comes from the National Association of Home Builders (NAHB), which reports that builder confidence in the market for newly built single-family homes is up four points to 35 in January, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI).
“It appears that the low point for construction sentiment in this cycle was recorded in December, even as many builders continue to use various incentives, including price cuts, to boost sales,” said NAHB Chairman Jerry Konter, a Savannah homebuilder and developer. , Go. “The rise in builder sentiment also means that the lows of the permit and start-up cycle are likely near, and a revival for residential construction could occur later in 2023.”
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