Up from here? The free-fall in housing market activity just concluded, says Capital Economics

Not only did spiking mortgage rates prompt the Pandemic Housing Boom to fizzle out in the summer of 2022, they also pushed housing market transactions into free-fall mode. By December, mortgage purchase applications were down over 40% on a year-over-year basis.

But there might finally be some good news for builders and agents: Researchers at Capital Economics believe housing market activity is bottoming out.

There’s a growing optimism among brokers and agents across the country. They're hoping that loosening financial conditions, which saw the average 30-year fixed mortgage rate fall from 7.37% to 6.09% over the past two months, will help to give the looming spring season a little juice.

Let's be clear: Even if housing market activity (i.e. home sales) have indeed bottomed, it doesn't guarantee that home sales will have a swift recovery. After all, housing affordability remains ”pressurized” to a historic degree. That'll happen when U.S. home prices soar 41% in just over two years and mortgage rates spike from 3% to over 6% in just a 12-month span.

https://finance.yahoo.com/news/free-fall-housing-market-activity-091917981.html