Declining mortgage rates boost homebuyer demand MABA Massachusetts RealEstate FirstTimeHomeBuyers

 Homebuyer demand is rising as mortgage rates continue to decline, according to a new Redfin report. On December 1, 2022 daily rates fell to six point twenty nine percent according to the report, a full percentage point lower than the seven point twenty nine percent peak last month. With that drop, Redfin found mortgage-purchase applications grew four percent from the previous week. Meanwhile, Redfin’s Home Buyer Demand Index, which measures requests for tours and other services, rose one point five percent from last month. Those changes in rates and demand are keeping some sellers from dropping prices as they had been recently. In the four weeks ended November 27, 2022 just over six percent of homes listed had a price drop down seven point two percent from the previous week.

 While this is all good news for the housing market, Redfin deputy chief economist Taylor Marr says we’re still not out of the woods.
“Key indicators of homebuying demand will likely be teetering on a knife’s edge with every data release that comes out related to the Fed’s path to eventually bringing rates down,” Marr said. “We’re likely past peak inflation, past peak mortgage rates and past the bottom for mortgage purchase applications. But there’s further cooling ahead for the housing market, as sales and prices have further to fall before buyers and sellers become comfortable with homebuying costs again.”

 According to the report, in ten of the fifty most populous metros, home prices are falling from last year. They include an eight point two percent year over year drop in San Francisco, two point eight percent in San Jose, California, two point seven percent in Pittsburgh, two point three percent in Detroit, one point seven percent in Sacramento and one point three percent in Austin. Chicago, San Diego, Los Angeles and Philadelphia had declines of less than one percent. The declines in Austin and Los Angeles represent the first year-over-year decreases since mid 2019. In Chicago, it’s the first time prices fell since June 2020. During the four weeks ended November 27, 2022 Redfin’s Homebuyer Demand index increased  up one point five percent from the previous month but down twenty percent from the year-ago period. Thirty-year mortgage rates fell to six point forty nine percent in the week ending December 1, 2022 while mortgage applications rose four percent week over week during the week ended November 25, 2022 despite purchase applications falling fourty one percent from 2021.

 The lower rate brought the average monthly mortgage payment on a median-priced home to two thousand three hundred and forty two dollars, down slightly from the previous week and down eight percent from three weeks prior, when mortgage rates were seven point eight percent. Pending home sales fell thirty five point five percent from last year, marking the largest decline since January 2015. Redfin found fewer Google searches for “homes for sale” during the week ended November 26,2022 down forty percent from last year. In the four weeks ended November 27, 2022 active listings rose twelve point nine percent from last year. Meanwhile, new listings fell twenty one pecent from last year, one of the largest declines since May 2020.

 The median asking price rose four point eight percent from 2021 to three hundred fifty nine thousand seven hundred and twenty five dollars, the slowest annual growth since the pandemic began. Meanwhile, the median sale price increased two point four percent year over year to three hundred fifty seven thousand and seventy three dollars, up just slightly from the week before, according to the report. Thirty-two percent of homes that went under contract had an offer within the first two weeks, showing little change from the previous four weeks but down from forty percent last year. Twenty-five percent of homes sold above list price, down from forty two percent last year and the lowest percentage since June 2020.

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