Real Estate Rundown December 2022
December 01, 2022
Photo by Sebastian Staines via Unsplash
Mortgage Rates Are… Slowing Down!
Mortgage rates have been rising continually in recent months, however, there is reason to be optimistic as they are now dropping slightly and are forecasted to decrease even more through the new year. According to the daily mortgage rates measured by Mortgage News Daily, average 30-year fixed mortgage rates have already dropped from 9.9% earlier in the month to 6.62%. While these numbers are still high compared to 2021, where the average 30-year fixed rate was around 3.11%, it represents a significant change in the market.
Mortgage applications have also increased by 2.2 percent from the prior week, according to the MBA’s Weekly Mortgage Application Surveys as of November 18th, 2022. This decline in mortgage rates has led to an increase in mortgage and purchasing loan applications, improving the purchasing power of potential homebuyers. This boost in demand could come as a surprise as housing prices are still extremely high, and the market has come to a standstill.
This unexpected drop is likely due to the October inflation report, which showed surprising signs of cooling off. Even with the slight decline in mortgage rates, it is still difficult for many buyers, especially first-time home buyers, to afford a monthly payment. Chief economist Christian deRitis at Moody’s Analytics warns “the economy remains fragile, and the world is unpredictable”. There are many factors happening in our world such as the war in Ukraine, or potentially another pandemic, which could disrupt the economy and cause mortgage rates to change course.
New Home Sales Soar
A record number of properties listed for sale in the third quarter were newly constructed homes. According to a Redfin report, 29% of single-family homes were new construction, compared to 25% in the third quarter of 2021, and 18% in 2020. This trend is accelerating from the surge in construction during the pandemic as well as existing home homeowners' hesitancy to list their houses for sale. This may be a helpful trend to be aware of when considering their marketing strategy.
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