The housing market has been facing numerous challenges in recent months, with potential buyers remaining hesitant to take the plunge on purchasing a home despite falling mortgage rates. According to the latest data from Freddie Mac, mortgage applications decreased by 2% in the week ending December 2 compared to the previous week. The average loan size for a purchase application was also at its lowest level since January 2021.
One factor contributing to this reluctance is the high level of inflation and volatile mortgage rates that have characterized the pandemic-era housing boom. The average rate for a 30-year fixed mortgage fell to 6.33% as of December 8, but this is still more than double the average rate of 3.1% a year earlier.
Sam Khater, Chief Economist at Freddie Mac, attributes the decline in mortgage rates over the past four weeks (the largest drop since 2008) to increasing concerns over lackluster economic growth. However, even with these lower rates, homebuyer sentiment remains low, with no major increase in purchase demand.
There is some hope on the horizon, however. In late October, the average rate on a 30-year fixed rate mortgage surpassed 7%, but with signs that inflation may be cooling, the Federal Reserve could potentially ease up on its aggressive rate hikes. This could lead to a stabilization of mortgage rates, which may encourage more buyers to enter the market.
Overall, the housing market remains in a state of flux, with both buyers and sellers waiting for more clarity on economic and mortgage rate trends before making any major decisions.
Source: https://www.usatoday.com/story/money/personalfinance/real-estate/2022/12/08/current-housing-market-mortgage-rates-home-prices/10811966002/