Mortgage rate decline pulls buyers back into the housing market

A sharp drop in mortgage interest rates in December may have kickstarted this year’s spring housing market early. Rates are about a full percentage point lower than they were in October, and consumers expect they will fall even more.

The average rate on the 30-year fixed has been on a wild ride since the start of the Covid pandemic. It hit more than a dozen record lows in 2020 and 2021, below 3%, causing a historic run on homebuying and a sharp rise in prices, only to then more than double in 2022. Rates hit a more than 20-year high in October 2023, hovering around 8% before falling back below 7% in December. Rates, however, are still twice what they were three years ago.

A recent report from Redfin, a national real estate brokerage, found demand starting to pick up in December as rates fell. Redfin’s Homebuyer Demand Index — a seasonally adjusted measure of requests for tours and other homebuying services from Redfin agents — was up 10% from a month ago to its highest level since August, according to the report. Pending sales, which measure signed contracts on existing homes, were down 3% from December 2022, but that was the smallest decline in two years.

The average rate on the 30-year fixed mortgage hit a recent low of 6.61% at the end of December, but is up slightly this month to 6.76%, according to Mortgage News Daily.

https://www.cnbc.com/2024/01/08/mortgage-rate-decline-pushes-buyers-back-into-the-housing-market.html