Christmas has arrived early for America’s homebuyers! And it’s not just one gift, but two that should make them giddy.
Gift No. 1: lower mortgage rates, which have been falling for the past four weeks.
“Housing data in the week that followed the Thanksgiving holiday showed that the recent dip in mortgage rates may already be having an impact,” explains Realtor.com® Chief Economist Danielle Hale in her weekly analysis.
Gift No. 2: Home price growth “slowed notably” for the week ending Dec. 3, according to Hale.
We unwrap the latest real estate statistics and what they mean for homebuyers and sellers in our weekly column “How’s the Housing Market This Week?”
Mortgage rates dipped again
Not too long ago, it had been a grim picture: Mortgage rates had more than doubled over the past year and reached a 20-year high of 7.08% for a 30-year fixed-rate loan in late October.
Yet since then, for the past month, rates have been in a free fall, hitting 6.33% for the week ending Dec. 8, down from the previous week’s 6.49%, according to Freddie Mac.
Even this singular one-week decline comes with major savings on a typical house, amounting to $185 saved per month.
Yet with rates in flux, there may be little time for home shoppers to waste.
“With far more consumers still generally expecting higher rates rather than lower rates, those hoping to make a purchase may have some urgency to capitalize on what may be a temporary dip,” warns Hale.
Home price growth is tapering off
In November, the median price of a house hovered at $416,000. Yes, that’s high, but nowhere near the record high of $449,000 in June.
Furthermore, although the cost of a home has grown by double digits year over year for the past 49 weeks straight, the good news for homebuyers is that this growth is steadily ratcheting down.
For the week ending Dec. 3, the median listing price grew by 10.3% compared with the same week last year. So prices are still higher than a year earlier, but this was a steep decrease from the prior week’s growth rate of 12.2%.
And if the slowing continues, home price growth could move back into single-digit territory before the end of the year, giving buyers even more purchasing power.
Where are all the new homes?
While homebuyers might be thrilled by these sudden good tidings on the mortgage and home price front, the downside is that they’ll have fewer fresh listings to shop.
For 22 consecutive weeks, the number of new home sellers willing to list has dwindled, dropping for the week ending Dec. 3 by 8% compared with this same week last year.
Yet the silver lining is that this is the smallest decline since July.
And overall, the total number of homes for sale—both new listings and old—shot up an eye-popping 53% compared with one year ago.
This spike in overall homes for sale is largely a result of homes spending more time on the market. For the week ending Dec. 3, home shoppers had nine more days to scroll through listings compared with the same time last year.
“Homes are sitting on the market for longer, as buyers take their time to decide,” says Hale.
Buyers may need to act quickly
While lower mortgage rates, tapering home price growth, and more properties to choose from are all excellent news for homebuyers, there are still plenty of challenges and unknowns looming in 2023.
“Affordability continues to be a challenge compared to a year ago,” says Hale.
Home shoppers eager to make the most of their sudden boost in buying power should look to Northeast and Midwest markets for well-priced, affordable homes.
“Looking ahead, we expect midsized markets that offer affordability and are home to a mix of domestic manufacturing, government, health care, and education employers to have some of the top housing markets of 2023,” says Hale.
The post Finally, Mortgage Rates and Home Prices Favor Buyers—but How Long Will This Christmas Miracle Last? appeared first on Real Estate News & Insights | realtor.com®.