Falling Interest Rates Reinvigorating National Real Estate Market

While affordability remains a challenge for many home buyers, another decrease in mortgage rates could bring them back to the market. The interest rate for the 30-year mortgage averaged 6.13% just a couple weeks ago, Freddie Mac reports, nearly a whole percentage point drop from a 7.08% peak just two months ago. This could boost homebuyer confidence and help dig the real estate market out of a “housing recession.” Furthermore, mortgage applications for home purchases have been inching up, the Mortgage Bankers Association (MBA) reports.

“Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market,” says Joel Kan, an MBA economist. “Many have been waiting for affordability challenges to subside.”

Nadia Evangelou, a senior economist and director of forecasting at the National Association of Realtors (NAR), says that mortgage rates could fall even further in the weeks ahead as investors anticipate the Federal Reserve’s next move.

Meanwhile, ever since the start of this year, mortgage rates have continued to trickle down. “As a result, home purchase demand is thawing from the monthslong freeze that gripped the housing market,” says Sam Khater, Freddie Mac’s chief economist. “Potential home buyers remain sensitive to changes in mortgage rates, but ample demand remains, fueled by first-time home buyers.”

Also, Evangelou notes that consumers seem to be accepting that historically low 3% rates in recent years aren’t likely coming back anytime soon. As rates see less fluctuation, more buyers will likely re-emerge onto the housing market.

For the week ending January 26, Freddie Mac reports the following national averages with mortgage rates:

• 30-year fixed-rate mortgages: averaged 6.13%, falling from the previous week’s 6.15% average. Last year at this time, 30-year rates averaged 3.55%.

• 15-year fixed-rate mortgages: averaged 5.17%, dropping from the previous week’s 5.28% average. A year ago, 15-year rates averaged 2.80%.

The market in Denver has remained on the cooler side this winter, but competition will begin to heat up as we look towards spring. If you’re thinking of becoming a homeowner in 2023, the time to start looking is now. Contact one of the experienced pros at Metrowest – we’d love to help you start the process!