The average rate for a 30-year fixed-rate mortgage experienced a recent notable decrease. From the final week of October to early December, rates dropped nearly 0.8 percentage points. This significant reduction has injected a new spark into our housing market. Indicators show an encouraging trend, with home purchase applications surging by 15% during the same period. This uptick is a good sign of renewed interest from potential buyers.
The current market demand remains highly sensitive to fluctuations in mortgage rates. To sustain this revived purchase demand, further reductions in rates are necessary. As we look ahead, experts predict a gradual easing of mortgage rates throughout the year, stabilizing within the 6% to 7% range. While this decrease will mitigate some affordability concerns, it’s not expected to be sufficient enough to increase the existing home inventory in the market significantly.
As a result, home sales in 2024 are anticipated to look similar to the trends in 2023—characterized predominantly by lower transaction volume and a shortage of inventory. This ongoing scarcity in supply, coupled with steady demand, is predicted to lead to a continued increase in national house prices in 2024.
Early Signs Show Those Homeowners Are Ready To Move Again
According to the
latest data from
Realtor.com, there were more new listings, in December 2023 compared to December 2022
(see graph below):
Here’s why this is so significant. Typically, activity in the
housing market cools down in the later months of the year as most sellers choose to delay their moves until after the holidays.
This is the first time since 2020 that we’ve seen an uptick in new listings this time of year. This could be a signal that the rate lock-in effect is easing a bit in response to
lower rates.
What This Means for You:
While there isn’t likely going to be a massive influx of inventory, it does mean more sellers may decide to list. As mortgage rates come down, more sellers will continue to re-enter the market – that gives buyers a better opportunity to find the home they are looking for, meaning more buyer activity and more action in the market overall.
As always, we are here to provide you with personalized guidance and exclusive insights to help you navigate our local real estate market.
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