This week, data from mortgage lender Freddie Mac revealed that the average rate for a 30-year fixed mortgage had dropped to 6.15%. This is significantly higher than the rate one year ago when it hovered around 3.56%.[0] Meanwhile, the average rate on a 15-year home loan dropped from 5.52% down to 5.28%.
During the four weeks ending January 15, 18 out of the 50 largest metropolitan areas experienced a decrease in home prices compared to the same period from the previous year.[1] According to a new report from Redfin, a technology-powered real estate brokerage, the median home-sale price increased 0.9% from a year earlier to $350,250 during the four weeks ending January 15, the biggest increase in a month.[1]
The quarterly home price growth gain at the end of 2022 was slightly higher than the 0.1% seasonally adjusted gain in the third quarter, according to Fannie Mae.[2] On a non-seasonally adjusted basis, home values declined 1.0% in the fourth quarter.[2] In March 2021, only 21% of homes sold for more than their final list price, compared to 40% in March 2020 – the lowest rate in over a year.[3]
Taylor Marr, the deputy chief economist at Redfin, declared that those who started to browse homes online and plan visits at the end of last year are turning into genuine buyers now.[1] With low competition, decreasing mortgage rates, and seller concessions, some buyers have returned to the market, thereby helping to maintain national home prices. However, many potential buyers are still holding back, and demand could weaken if inflation fails to slow or mortgage rates go up.[1]
Doug Duncan, Senior Vice President and Chief Economist from Fannie Mae, noted that there are economic signals pointing to recession but also signs that a ‘soft landing’ may be in the offing.[4] Our opinion is that a mild recession is still likely, particularly if the Federal Reserve continues to prioritize labor market conditions.[5]
With the lower rate, the average monthly mortgage payment on a median-priced home was $2,262, unchanged from the week prior but up 30% from a year ago.[1] In San Francisco, prices dropped by 10.1% compared to the previous year, while in San Jose, the decrease was 6.7%. Austin saw a 5.5% drop, Detroit experienced a 4.[6]
0. “US housing market shows early signs of recovery as demand rises” Fox Business, 25 Jan. 2023, https://www.foxbusiness.com/economy/us-housing-market-shows-early-signs-recovery-demand-rises
1. “Home prices increase as falling mortgage rates attract buyers” Boston Agent Magazine, 20 Jan. 2023, https://bostonagentmagazine.com/2023/01/20/home-prices-increase-as-falling-mortgage-rates-attract-buyers/
2. “Single-family home price growth slows, echoing sales downturn” Mortgage Professional, 18 Jan. 2023, https://www.mpamag.com/us/mortgage-industry/market-updates/single-family-home-price-growth-slows-echoing-sales-downturn/433263
3. “Going Up From Here? Home Prices Post Small Increase As Rate Drop Lures Buyers” Forbes, 20 Jan. 2023, https://www.forbes.com/sites/brendarichardson/2023/01/20/going-up-from-here-home-prices-post-small-increase-as-rate-drop-lures-buyers/
4. “Fannie Mae Still Sees Recession Looming; Soft Landing a Possibility” Connect CRE, 20 Jan. 2023, https://www.connectcre.com/stories/fannie-mae-still-sees-recession-looming-soft-landing-a-possibility/
5. “Brace for Impact: Fannie Mae Forecasts A Stormy Economic Outlook” Benzinga, 24 Jan. 2023, https://www.benzinga.com/real-estate/23/01/30516317/brace-for-impact-fannie-mae-forecasts-a-stormy-economic-outlook
6. “As Buyers Return To The Market, Home Prices Rise” National Mortgage Professional, 20 Jan. 2023, https://nationalmortgageprofessional.com/news/buyers-return-market-home-prices-rise
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