Real Estate Rundown February 2023
February 01, 2023
Photo by Avi Waxman
Impact of Fluctuating Mortgage Rates on the Housing Market
Recent fluctuations in mortgage rates have garnered significant attention in the housing market. In January 2023, 30-year fixed-rate mortgages saw an increase followed by a decrease later in the month. According to Freddie Mac's Primary Mortgage Market Survey, 30-year fixed-rate mortgages averaged 6.13% as of January 26, 2023, with a slight decrease from the previous week's average of 6.15%. This slight decrease in mortgage rates has resulted in a thawing of the home purchasing demand that has been frozen for several months.
The National Association of Realtors predicts that mortgage rates may fall even further in the coming weeks as the Federal Reserve is expected to take a smaller rate hike in February, which is primarily due to the easing of inflation. Home sales activity is expected to be busier this spring and contribute to a stronger housing market.
Pending Home Sales Report
According to the National Property Broker Redfin, pending home sales have dropped to the lowest levels in seven years, with a 32% year-over-year decrease. However, pending home sales showed some improvement in December 2022, with a 2.9% nationwide increase in seasonally adjusted pending home sales. This positive sign indicates that the housing market is on the path to recovery.
Rental vs. Home Ownership
With declining rent prices and rising mortgage rates, it has become more affordable to rent rather than buy in many markets. A rental report on Realtor.com showed that the monthly cost of renting a home is lower than buying a starter home in 45 out of the 50 largest U.S. metro areas. Despite higher rents compared to previous years, renting has become relatively more affordable as of late. According to a new report by the national real estate brokerage, House Canary, the highest annual rent increases are seen in areas such as Indianapolis, Charleston, and New Haven. Whereas areas like Phoenix, Memphis, and Cape Coral have seen a decrease in rent annually.
In conclusion, the housing market continues to be impacted by fluctuations in mortgage rates and pending home sales. However, with positive signs such as the easing of inflation and an increase in pending home sales, the market is showing signs of improvement.
Looking for real estate market data? Learn more at FMAdata.com or call 303-443-2070 today.