Paralysis, Pent-Up Demand Welcomes Lower Mortgage Rates
“Casual buyers may want to wait a few more months,” Redfin says.
There will be continued downward pressure on mortgage rates as banks decide they want to be in the money-making business, Scott Harris, agent, Brown Harris Stevens, tells GlobeSt.com.
“It may take a few months for some buyers to catch on, but there has been buyer paralysis in the marketplace- and plenty of pent-up demand,” Harris said. “Any stabilization or softening of rates will turn that spark into a nice, cozy fire for the winter.”
For the week of Nov. 14, rates dropped from over 7% to 6.6% on better-than-expected inflation news, bringing some hope to prospective buyers. It was the largest weekly mortgage rate drop in four decades, along with the slowest annual home-price growth since the start of the pandemic, according to Redfin.
This provided some relief for would-be homebuyers’ budgets, essentially giving them approximately a $100 per month discount, Redfin said.
Redfin Deputy chief economist Taylor Marr said in prepared remarks, “More casual buyers may want to wait a few more months, as there’s reason to be cautiously optimistic that the worst of inflation and high rates are behind us, and monthly payments could come down more.”
Buyers, Sellers Have Not Yet Reacted
Rates are still more than double where they stood a year ago and Redfin’s housing-market data hasn’t shown an uptick in homebuying or selling interest yet – “though we wouldn’t expect to see an increase until this week at the earliest, when buyers and sellers have had a chance to react to lower rates,” the real estate brokerage said.
Additionally, Redfin reported that pending home sales were down 35% year over year during the four weeks ending Nov. 13, the biggest annual decline on record.
Some More Numbers
Redfin reported that the median home sale price was $357,500, up 3% year over year, the slowest sale-price growth since the beginning of the pandemic.
Among the 50 most populous U.S. metros, pending sales fell the most from a year earlier in Las Vegas (-63%), Jacksonville, FL (-58%), Phoenix (-57%), Austin (-56%) and Sacramento (-54%).