by Movement.com
MORTGAGE RATES MOVING DOWNWARD, DEMAND RISING
There has been a lot of good news for homebuyers recently as mortgage interest rates continue to decline. The latest Freddie Mac 30-year fixed-rate mortgage average declined again week-over-week, hitting 6.15%. Freddie Mac economists attribute the decline to positive news about inflation, saying “As inflation continues to moderate, mortgage rates declined again this week. Rates are at their lowest level since September of last year, boosting both homebuyer demand and homebuilder sentiment. Declining rates are providing a much-needed boost to the housing market, but the supply of homes remains a persistent concern.”
Supply will become even more of an issue as demand starts to creep back up. The Mortgage Bankers Association’s data showed that mortgage applications jumped by 28% for the week ending Jan. 13. The increase came from both refinances and purchases as the dip in rates benefitted both parties.
The MBA’s new home purchase application data showed a different story, however with new home purchase mortgage applications declining by more than 25% in December compared to December 2021. Joel Kan, the MBA’s Vice President and Deputy Chief Economist, said in their release “The decline in activity was in line with single-family housing starts that were 32 percent lower than a year ago. Higher mortgage rates and a weakening economy held back buyers at the end of last year.”
There is some positive news on the homebuilder front this past week as builder sentiment increased for the first time in a year. The National Association of Home Builders/Wells Fargo Housing Market Index rose by 4 points to 35. Just one year ago, the index had a reading of 83. Anything above 50 is considered positive.NAHB Chairman Jerry Konter said of the increase, “It appears the low point for builder sentiment in this cycle was registered in December, even as many builders continue to use a variety of incentives, including price reductions, to bolster sales.” Konter continued, “The rise in builder sentiment also means that cycle lows for permits and starts are likely near, and a rebound for home building could be underway later in 2023.”
