Average Long-Term Mortgage Rates Dip for 9th Straight Week

Leave a comment January 3, 2024 LaurelMurphyRE

calculator with key on keyring with house on paperwork that says mortgage

DECEMBER 29, 2023 By Matt Ott

Freddie Mac says mortgage rates slid to the lowest level since May, “economy remains on firm ground with solid growth.”

WASHINGTON (AP) – The average long-term U.S. mortgage rate retreated for the ninth week to reach its lowest level since May.

The average rate on a 30-year mortgage dipped to 6.61% from 6.67% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.42%.

Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also inched down this week, with the average rate falling to 5.93% from 5.95% last week. A year ago, it averaged 5.68%, Freddie Mac said.

“Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market,” Sam Khater, Freddie Mac’s chief economist.

Mortgage rates have been easing since late October, when the average rate on a 30-year home loan reached 7.79%, the highest level since late 2000.

The decline has tracked the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield, which in mid-October surged to its highest level since 2007, has been falling on hopes that inflation has cooled enough for the Federal Reserve to shift to cutting interest rates after yanking them dramatically higher since March of 2022.

The Fed has opted to not move rates at its last three meetings, which has also given financial markets a boost.

Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with its benchmark federal funds rate can influence rates on home loans.

The sharp run-up in mortgage rates that began early last year has pushed up borrowing costs on home loans, reducing how much would-be homebuyers can afford even as home prices have kept climbing due to a stubbornly low supply of properties on the market. That’s weighed on sales of previously occupied U.S. homes, which are down 19.3% through the first 11 months 2023.

Despite the recent decline, the average rate on a 30-year home loan remains sharply higher than just two years ago, when it was 3.11%. The large gap between rates now and then contributes to the low inventory of homes for sale by discouraging homeowners who locked in rock-bottom rates two years ago from selling.

Some housing economists are forecasting that home sales will increase next year, assuming that mortgage rates ease further.

Leave a comment April 12, 2023 LaurelMurphyRE

illustration of houses with red graphic line showing

APRIL 7, 2023

Why Does It Still Feel Like a Seller’s Market?

By Kerry Smith

RE usually sees cycles between buyer’s and seller’s markets, but this time it’s a bit different. Supply vs. demand hasn’t changed because both sides pulled back.

SEATTLE – New listings fell 21.8% year-to-year during the four weeks ending April 2, one of the biggest drops since the start of the pandemic, according to a Redfin study.

An increasing number of homeowners don’t want to move because they still have generational-low mortgage rates secured only a few years ago. While rates have fallen for four weeks in a row, according to this week’s report, they’re still about twice as high as they were before 2021.

As a result, buyers unafraid of current mortgage rates quickly scoop up new listings. Of homes going under contract, nearly half are doing so within two weeks; at the beginning of 2023, it was about 25%.

“Elevated mortgage rates are perhaps an even bigger deterrent for would-be sellers than for would-be buyers,” says Redfin Deputy Chief Economist Taylor Marr. “Giving up a 3% mortgage rate for one in the 6% range is a tough pill to swallow. Today’s serious homebuyers have grown accustomed to the idea of a 5% or 6% rate and have adjusted their budgets accordingly.”

“Shiny new listings are getting multiple offers and selling fast. The caveat is that they have to be priced correctly from the beginning,” says Denver Redfin agent Stephanie Collins. “One of my buyers recently made an offer on a move-in ready home in a popular area. The home was priced right in line with the market at $520,000; it received eight offers and went for $560,000 to a competing buyer.”

Florida ranks near top for rising home prices

In cities where buyer demand outpaces seller supply, home prices continue to go up – and Florida is home to three of the top five U.S. cities for price increases.

While Milwaukee led the nation for price increases (up 11.4% year-to-year), Fort Lauderdale came in second (up 8.9%), followed by West Palm Beach (up 8.2%), Miami (up 7.9%) and Columbus, Ohio (up 6.3%).

On the flipside, the top five price declines in the U.S. were largely on the West Coast: Home prices dropped in 28 of the U.S.’s 50 most populous metros, with the biggest drop in Austin, Texas (down 14.7% year-to-year), Sacramento (down 11.7%), Oakland, California (down 10.4%), San Jose (down 10.2%) and Seattle (down 9.6%).

Will Home Prices and Rents Finally Fall? Our Bold Predictions on Real Estate in 2022

Leave a comment December 4, 2021 LaurelMurphyRE

By Clare Trapasso
Dec 1, 2021

1 of a 3 part series
Highlights:

Prices will stay high, inventory will remain tight, and mortgage rates will rise
Prices aren’t anticipated to come down from the highs
“The pace of price growth is going to slow notably, bringing it more in line with buyers’ incomes”

Here’s what we already know: Since the COVID-19 pandemic began, the real estate market has been on a wild ride of unprecedented highs and lows—record-high home prices on one side, record-low mortgage rates and available homes for sale on the other. It’s been a time of overwhelming stress for many, gigantic profits for some, and great disorientation for most of us.

Now the housing experts say the market is “normalizing.” But what does that mean? Will home prices and rents finally come down? Will more homes go up for sale? And what does the year ahead have in store for the real estate market?

The Realtor.com® 2022 housing forecast anticipates the market will continue slowing down from the frenzy seen in the spring when prices shot up to new heights. However, prices will stay high, inventory will remain tight, and mortgage rates will rise.

The bottom line: Even as the market calms down further, it’s still expected to be challenging for buyers, especially those purchasing their first homes.

“The 2022 housing market will continue to be a seller’s market with fast-moving homes and rising prices,” says Realtor.com Chief Economist Danielle Hale. “But the competition should be a bit less intense than we’ve seen recently.”

Home prices will stay high, but price growth will continue slowing

Home prices aren’t expected to keep zooming up into the stratosphere in 2022 the way they did this year. So buyers can breathe at least a shallow sigh of relief. Instead, Realtor.com economists anticipate they’ll increase at a much slower rate of just 2.9% over this year compared with an anticipated 12% rise in 2021.

This means the double-digit price growth that confounded buyers earlier this year is expected to taper off.

However, prices aren’t anticipated to come down from the highs they reached this year due to the continuing shortage of properties for sale and hordes of buyers continuing to enter the market. They just won’t go up so much as quickly.

“Price growth is expected to move back toward a normal range, but this is on top of recent high prices,” says Hale. “So prices will [still] hit new highs.”

While that’s not great news for buyers, homes aren’t expected to cost much more than they did just a few months ago.

“The pace of price growth is going to slow notably, bringing it more in line with buyers’ incomes,” says Hale. “With prices high and mortgage rates beginning to tick up, people won’t be able to be as aggressive in what they’re willing to pay.”