This week has brought some positive and exiting developments to the housing market: Mortgage rates are decreasing, new listings are increasing, and mortgage-purchase applications have risen by almost 20% since November.
The average daily mortgage rates have dropped to 6.82%, the lowest level since May. This is the first time that daily rates have fallen below 7% since July. The rates declined after the Federal Reserve delivered encouraging news to homebuyers during its December 13 meeting, indicating that they plan to lower interest rates sooner and more than expected. This supports the prediction by Redfin that mortgage rates will likely reach the mid-6% range in 2024.
Mortgage payments are currently at their lowest point in eight months. Even before the Federal Reserve meeting, mortgage rates had significantly decreased from their peak, providing some relief to homebuyers. As of the four weeks ending on December 10, the median U.S. housing payment stands at $2,503, which is $233 lower than the record high in October and the lowest level since April.
The declining costs are enticing homebuyers to enter the market. Mortgage-purchase applications have increased by 19% from the historically low point they reached at the beginning of November. Additionally, Redfin’s Homebuyer Demand Index, which measures requests for tours and other homebuying services from Redfin agents, has risen by 3% compared to a month ago.
Prices and new listings are on the rise. The median U.S. home-sale price has increased by 4.5% year over year, the largest jump since October 2022. This price increase is driven by the higher demand surpassing the available supply. Although new listings have risen by 8% compared to the previous year, the total number of homes for sale is still down by 5%.
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