The housing market continues to face challenges as mortgage rates experience a decline while pending home sales remain stagnant. These contrasting trends indicate a complex landscape for prospective buyers and sellers. In this article, we will explore the latest data on mortgage rates, pending home sales, and the overall state of the housing market.
Mortgage Rates Show a Promising Decline
According to Freddie Mac’s latest Primary Mortgage Market Survey, the average rate for the benchmark 30-year fixed mortgage fell to 6.61% this week. This marks a decrease from 6.67% the previous week, although it remains higher than the 6.42% rate recorded a year ago.
Simultaneously, the rate on the 15-year fixed mortgage experienced a significant drop, averaging 5.93% compared to 6.95% the previous week. This substantial decrease indicates a potential opportunity for homeowners looking to refinance or buyers seeking more affordable mortgage options.
Pending Home Sales Remain at a Record Low
Despite the decline in mortgage rates, the National Association of Realtors’ latest index of pending home sales reveals that contracts to purchase previously-owned homes held steady at a record low in November. The index, which measures the number of homes under contract but not yet closed, is an essential indicator of the health of the housing market.
Economists surveyed by Refinitiv had anticipated a 1% rise from October’s reading of 71.4, which was already the lowest recorded since the index’s creation in January 2001. The data reflects the impact of inflation, high mortgage rates, and a shortage of supply on the housing market, making it challenging for buyers to enter the market.
Housing Starts Offer a Glimmer of Hope
While pending home sales remain stagnant, the Commerce Department reported a significant surge in housing starts, rising by 14.8% last month. This increase suggests progress in an otherwise sluggish market and may be attributed to buyers gravitating towards new construction due to limited existing home supply.
The Outlook for the Housing Market
Realtor.com’s 2024 Housing Forecast could see better-than-expected home sales activity if mortgage rates can maintain the recent improvements observed in the past two months. However, it is essential to monitor the market closely as various factors, such as inflation, supply shortages, and economic conditions, can influence the housing market’s future trajectory.
See first source: Fox Business
FAQ
1. What are the latest trends in mortgage rates, and how do they impact buyers and homeowners?
Mortgage rates have recently shown a decline, with the average rate for the 30-year fixed mortgage dropping to 6.61%. This decrease presents potential opportunities for homeowners looking to refinance or buyers seeking more affordable mortgage options. However, it’s essential to consider that rates, although lower than the previous week, are still higher compared to a year ago at 6.42%.
2. Why are pending home sales at a record low, despite declining mortgage rates?
Pending home sales remaining at a record low can be attributed to several factors, including inflation, high mortgage rates, and a shortage of housing supply. These challenges make it difficult for buyers to enter the housing market, even with the benefit of lower mortgage rates.
3. What is the significance of the housing starts increase reported by the Commerce Department?
The significant surge in housing starts, rising by 14.8% last month, suggests progress in an otherwise sluggish housing market. This increase may be due to buyers showing interest in new construction as an alternative to the limited supply of existing homes. It offers a glimmer of hope amid the challenges faced by the housing market.
4. What is the outlook for the housing market in 2024, according to Realtor.com’s Housing Forecast?
Realtor.com’s 2024 Housing Forecast suggests the potential for better-than-expected home sales activity if mortgage rates continue to maintain their recent improvements observed over the past two months. However, it’s essential to closely monitor the housing market, as various factors like inflation, supply shortages, and economic conditions can influence its future trajectory.
Featured Image Credit: Photo by R ARCHITECTURE; Unsplash – Thank you!
