Will Plunging Mortgage Rates Spark a New Homebuying Rush? Here’s What the Latest Housing Statistics Say

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While mortgage rates are rarely great conversation fodder over Thanksgiving dinner, this Thanksgiving is a whole different story. If there’s a homebuyer or seller at your table, you can bet your good gravy the topic will pop up.

After all, mortgage rates have more than doubled throughout 2022, blasting past the 7% threshold and hitting a 20-year high in late October.

Yet in the past two weeks, there’s been an astonishing reprieve.

We’ll take a look at the latest statistics that have made the American dream of homebuying such a roller-coaster ride this year in our column “How’s the Housing Market This Week?” And lo and behold, the overall message this Thanksgiving week is actually good news.

Mortgage rates fell again

The headliner is that mortgage rates fell for the second week in a row, with the 30-year fixed-rate mortgage averaging 6.58% in the week ending Nov. 23, according to Freddie Mac. The most popular mortgage product is now half a percentage point lower than its recent high.

So is this enough of a break to bring out more homebuyers? It was in the past, but whether this cycle will repeat remains to be seen.

“When mortgage rates dipped this summer, it boosted buyer demand enough to stabilize cooling trends,” noted Realtor.com® Chief Economist Danielle Hale in her weekly analysis. “While that is a possibility going forward, economic uncertainty and the sense that low rates may not last long enough for shoppers to capitalize on them could mean we don’t see the same boost in demand this time around.”

It’s worth noting, however, that applications for mortgages have risen in each of the past two weeks, in line with the decline in rates, according to data from the Mortgage Bankers Association. Apparently, prospective buyers are keeping their eye on the ball and pouncing at any window of opportunity.

Home prices are becoming more manageable

Another hopeful trend is underway: Home prices have decelerated for the sixth straight week, meaning that they rose, but at a slower pace than before. Glacially slower, in fact.

In this case, prices were 11% higher compared with a year ago for the week ending Nov. 19, a bit slower growth than the prior week’s 11.1%.

While double-digit yearly gains are still a bit hard to swallow, they’re likely to slow even further, to single-digit, year-over-year increases by the end of the year.

Home sellers are still sitting out

Realtor.com data, however, shows that fewer homes were listed for sale in the week ending Nov. 19 compared with a year ago. That’s the 20th straight week of yearly declines.

So despite the good news on mortgage rates and home prices, seller confidence still seems to be in the pits, as our October report showed. And this, in turn, gives homebuyers fewer fresh properties to consider.

On the upside, though, the bargain bin of old listings is growing. For the week ending Nov. 19, overall inventory is up 49% compared with a year ago, and these homes sat on the market seven days longer than they did a year earlier. This means buyers can take their sweet time shopping for real estate deals. Black Friday home purchase, anyone?

Still, as Hale points out, “Home shoppers this year have had to contend with nearly 3X the mortgage rate volatility of a typical year. With the inflation and economic outlook continuing to evolve and the Fed continuing to observe and react, volatility may very well worsen before it begins to improve. Fed decision-makers have made it clear that they view this victory [one month’s inflation data] as one battle in a longer-term war that is not yet over.”

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