Earlier this month, mortgage rates fell for the fourth consecutive week to 6.33% – while there is still a way to go as the average mortgage rate was 3.1% a year ago, this decline may be enough to see an increase in housing activity.
“The Mortgage Bankers Association (MBA) expects the recent downward trend in mortgage rates to continue. Along with moderating home prices, declining rates should “encourage more homebuyers to return to the market in early 2023,” said Bob Broeksmit, the president and CEO of the MBA.
In addition, the average monthly mortgage payment is almost $200 less than it was several weeks ago when interest rates reached their peak in 2022.
“If inflation decelerates toward the Fed’s target range in the second half of 2023, as is currently expected, then it’s possible that mortgage rates may continue to decline modestly in the latter half of the year,” said Mark Fleming, chief economist at First American. “While mortgage rates will remain high compared with pandemic-era lows, stable and potentially modestly lower mortgage rates will elevate housing market potential in 2023.”
In 2022, Florida’s rental rate increased by 4% but those rates are also dropping – November saw the highest one-month decline in 7 years, according to the latest report from Zillow.
“Rent growth is likely to continue cooling… and we expect declines to become more common in the new year. That should ultimately help slow inflation further. Slow inflation will lead to lower mortgage rates, which should also bring more homebuyers back to the market,” said Redfin Economics Research Lead Chen Zhao.
Meanwhile, December represents the 12th straight monthly decrease in homebuilder sentiment. Builder confidence in the market for newly-built single-family homes declined two points to 31, the lowest confidence reading since 2012, according to a recent announcement from the National Association of Home Builders (NAHB).
“The silver lining in this HMI report is that it is the smallest drop in the index in the past six months, indicating that we are possibly nearing the bottom of the cycle for builder sentiment,” NAHB Chief Economist Robert Dietz said in a statement. “Mortgage rates are down…and for the first time since April, builders registered an increase in future sales expectations.”
With this being said, 2022 is ending on a brighter note than some would have expected. Looking ahead, some predict the housing market in 2023 will slow despite lower rates while others predict affordability will ‘stabilize” in 2023 leading to an increase in home sales.
Check out one of Inman’s latest articles which shares responses from their latest questionnaire regarding 2023 real estate predictions here.
On a local note, Tampa has been named the number one place to live in Florida by Forbes! View the full report here.
