Mortgage rates have been falling for five weeks in a row.
According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage for the week ending April 13 was 6.27%, down from 6.28% the week before. However, it was almost a year ago, when the average was barely 5%.
However, a government study released on Wednesday indicated that total inflation declined marginally in March, suggesting that could alter in the upcoming months.
In response to the inflation report, Lawrence Yun, chief economist for the National Association of Realtors®, said in a press statement, “Mortgage rates will go down over time if inflation stays low.”
He also thinks things will get even better in the next few months: “By the end of the year, it’s likely that mortgage rates will drop to less than 6%.”
In this “How’s the Housing Market This Week?” we’ll talk about what all of this means for buyers and sellers.
Can lower mortgage rates rescue the housing market?
Yes, the prices of homes for sale are still going up. For the week ending April 8, prices were 3.2% higher than they were a year ago. But these gains are getting smaller and smaller each week, and economists at Realtor.com have said before that prices will actually go down by the summer.
In her weekly review, Danielle Hale, the chief economist at Realtor.com®, says that these small drops are good news for people looking to buy a home before the end of 2022.
Prices and interest rates are still high, so there’s no way around it: “Affordability continues to be a challenge,” says Hale.
Some buyers are so upset by this news that many of them have just given up for now. Two-thirds of people who want to buy a home are waiting until mortgage rates go down, according to a recent poll from U.S. News & World Report.
As for how low they needed to go to get buyers moving, 28% said they’d start looking for a home again once rates go below 6%, 30% said they’d wait until they go below 5.5%, and 26% said they’d wait until they go below 5%. Experts say, though, that this is unlikely to happen in 2023, so these homebuyers may have to wait a long time.
How mortgage rates affect people who want to sell a home
Not just people who want to buy a home are waiting for mortgage rates to go down.
“Homeowners seem to be aware of how things have changed, and more of them are choosing to wait it out instead of putting their home on the market,” says Hale.
For the week ending April 8, 32% fewer homes were put on the market than at the same time last year. This could be because of the spring breaks, though.
“However, the number of newly listed homes is still one of the 2023 housing market’s weak spots,” says Hale.
If you’re on the fence about whether or not to sell your home, you might want to hurry: Economists at Realtor.com have decided that the best time to list a home for sale in 2023 is the week of April 16–22. Still, many people may have chosen to wait until next year.
The homes that are for sale are still there for a long time. In the last week, they were on the market for an average of 19 more days than a year ago. And the longer these listings sit, the more inventory there is overall. Compared to a last year, the number of live listings (both new and old) is up 44%.
The home market needs help to get moving again. We are still determining if mortgage rates will drop enough to get things moving.
The housing market is on a decline
Another bad thing for sellers is that fewer people put their homes on sale for the 39th straight week, which ended on April 1.
Speianu says that home sales are still at low levels compared to the past because there need to be more new homes on the market.
Even though the number of real estate listings is 53% higher than it was a year ago, many of these homes have already been picked and passed over. On average, items stayed on the market 18 days longer than they did at this time last year. This is a sign that buyers prefer to choose from something other than what they have to choose from. In fact, homes have been sitting empty for 35 weeks in a row longer.
Read Also: Application for mortgage drops by 8%
But this slow pace might pick up if more people who want to buy a home go to open houses as the weather gets warmer and mortgage rates go down.
Speianu says, “It’s likely that the time a home spends on the market will keep going down this spring as we get closer to mid-April, which is always the best time to sell a home.” “However, sellers must change their pricing and expectations to fit the current market.”
“Buyer demand tends to be sensitive to changes in mortgage rates,” says Hannah Jones, an economist and research expert at Realtor.com. “When mortgage rates go down, buyer demand goes up.”
On the other hand, Jones says, “Despite these increases in demand, the housing market is still too expensive for many people who want to buy.”
Reference: Mortgage Rates Just Fell Again