Earlier this month mortgage rates fell for the fourth consecutive week to 6.33% from 6.49% – dropping more than three-quarters of a point since hitting a 20-year high in November. One year ago, the average mortgage rate was 3.1%.
With mortgage rates continuing to drop, data has shown that the market has begun to stabilize. Week-to-week purchase application data has decreased by 3% and year-over-year data declined by 40%. Read the full report here.
As a result of these declining mortgage rates, there are signs that inflation may start to cool. During 2022, there has been a cumulative 375 bps hike (March = 25 bps, May = 50 bps, and in June, July, September, and November there were four subsequent 75 bps increases), and just yesterday the Fed increased rates by half a percentage point which is a lower rate hike than the last four increases, although, steeper hikes may be ahead. Read the latest updates here.
“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” reported Fed Chairman, Jerome Powell.
October was also the fifth consecutive month that pending sales declined. The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, sank 4.6% to 77.1 in October. Year-over-year, pending transactions slipped by 37%. An index of 100 equals the level of contract activity in 2001.
Despite declining rates, 40% of Americans say they would like to move but are seeking a more affordable place to live as they still feel priced out of the current market. Read the full report here.
Renters are also still feeling the pain. “More than half (54%) of American renters don’t believe they will ever be able to own a home,” Credit Karma reported from a recent survey found here.
“While we’re beginning to see signs of a cooling rental market, many Americans are still grappling with ballooning cost-of-living expenses, stagnant wages, and high borrowing costs,” Colleen McCreary, a consumer financial advocate at Credit Karma said.
The real estate industry is seeing many signs of relief but will it last? Here are Windermere Real Estate’s Chief Economist, Matthew Gardner’s top 10 predictions for the 2023 real estate industry.
NAR also releases 2023 forecasts – predicting 4.78 million existing homes will be sold, prices will remain stable, and Atlanta will be the top real estate market to watch. Read more.