Stabilization in borrowing costs is easing home shoppers’ affordability concerns.
Mortgage rates, which have settled in the 6% range, barely budged this week, giving potential home buyers more confidence to shop for real estate. The 30-year fixed-rate mortgage averaged 6.69%, marking the sixth consecutive week of holding steady, Freddie Mac reports.
“Given this stabilization in rates, potential home buyers with affordability concerns have jumped off the fence and back into the market,” says Sam Khater, Freddie Mac’s chief economist. “Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace.”
Buyers are already reemerging in the market. Mortgage applications to purchase a home—a gauge of future homebuying activity—are up nearly 8% compared to the week before, the Mortgage Bankers Association reports. “Conventional and FHA purchase applications drove most of the increase last week as some buyers moved to act early this season,” says Joel Kan, an economist at the MBA.
Sales of newly built homes also are on the rise, increasing 8% month over month and 4.4% year over year in December, the Commerce Department reported this week. The construction uptick coincided with drops in mortgage rates at the end of last year. Plus, the latest homebuilder surveys show rising optimism for future sales expectations in the new-home sector, says Alicia Huey, chairperson of the National Association of Home Builders.
“There is no question that 2023 was a rough year in housing, but there are plenty of reasons to see optimism in 2024,” says Jessica Lautz, deputy chief economist at the National Association of REALTORS®. “Lower mortgage interest rates will have buyers and sellers reconsider sitting on the sidelines.”
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 25:
- 30-year fixed-rate mortgages: averaged 6.69%, increasing from last week’s 6.6% average. A year ago, 30-year rates averaged 6.13%.
- 15-year fixed-rate mortgages: averaged 5.96%, increasing from last week’s 5.76% average. Last year at this time, 15-year rates averaged 5.17%.
Source: nar.realtor
