Homebuyers Thankful For Decreasing Interest Rates

Amidst the festive cheer of the holiday season, the real estate landscape is undergoing an unexpected shift that might just be the silver lining homebuyers have been waiting for. As customary market slowdowns typically accompany this time of year, the current holiday housing market is proving to be anything but typical.  The trend of decreasing interest rates could mean that buying a home in 2023, rather than waiting for the the 2024 spring market, may be a smart decision,  If interest rates continue to decrease, you may find yourself competing against more buyers, opposed to buying your dream home now and refinancing later (if the rates continue to drop). 

Dropping Mortgage Rates Illuminate Buyer Opportunities

A significant catalyst for this unconventional market activity is the recent drop in mortgage rates, averaging an enticing 7.29% for a 30-year fixed-rate home loan in the week ending Nov. 22 (down .5% over the last two weeks, from the high of 7.79% on October 26th).

Glimpse of Hope: Surge in New Listings

Contrary to the prevailing trend, the latest housing statistics from FRED (St. Louis Federal Reserve) offers a glimmer of hope. New listings experienced a gain for the month of October. This surge is a welcomed reprieve, considering the scarcity of housing inventory in recent months.

Understanding the Influx of New Housing Inventory

Housing inventory constraints have been a persistent challenge, but the past three months have witnessed a notable increase in new listings. Moreover, the total number of active listings (both new and old) has risen from 14,996 to 15,411 for the month of October compared to the previous year, marking the fifth consecutive month of increased housing inventory.

However, it's crucial to maintain a broader perspective. Despite the recent surge, the housing market remains undersupplied from a longer-term macroeconomic viewpoint, with the current for-sale homes standing at 41.8% below pre-pandemic levels.

Rising Home Prices Amidst Optimistic Trends

While the influx of new listings offers hope, home prices continue their upward trajectory, increasing by 1.2% over last year's levels for the week ending Nov. 18. Despite this less-than-ideal scenario, there is optimism that as more homes enter the market, the pressure on prices will ease.

However, it's acknowledged that this relief is more of a consolation prize for now, as prices remain higher than a year ago, and mortgage rates persist in the mid-7% range, contributing to ongoing affordability challenges.

Accelerated Pace of Home Sales: A Peculiar Phenomenon

Contrary to the traditional fall slowdown in home sales, this season has seen an unusual acceleration. The typical prolonged duration a home spends on the market during this period has slowed more gradually than expected. For the week ending Nov. 18, homes spent four fewer days on the market compared to the same period last year.

Closing Thoughts: Unusual Dynamics and Timely Decisions

The takeaway for potential homebuyers is clear – if you find a home you like, hesitation may not be in your best interest. The pace of sales picking up, combined with the unique dynamics of this holiday housing market, suggests that decisive action could be the key to securing your dream home in this atypical real estate environment.