As 2023 draws to a close, good news for homebuyers keeps rolling in, suggesting change might be just around the corner.
New listings are on the rise and purchase applications are beginning to rebound, a new report from Redfin found.
Purchase applications are up nearly 20% from a low point in November. This is thanks to a combination of cooling mortgage rates and surprise inventory upticks. Daily rates have fallen to as low as 6.82% in recent days, the first time they’ve come in below 7% since July.
And even better rate news may be on the way as well. The FOMC decided not to raise the federal funds rate at its December meeting and even suggested that cuts may be coming in 2024.
The news emboldens analysts who have predicted mortgage rates falling below 7% in the new year. Redfin predicts rates to fall to the mid-6%s in the first half of 2024, while Realtor.com’s 2024 Housing Forcast suggests mortgage rates will ultimately clock in at 6.5% by this time next year.
But even setting the future aside, the improvements of the last few weeks have already created tangible benefits for homebuyers. The median U.S. housing payment fell $233 to $2,503 as of the four weeks ending December 10, down from a record high in October and hitting its lowest level since April.
In response, requests for tours and other services from Redfin agents are up 3% month-over-month, suggesting potential buyers may be ready to dip their toes back in the water.
Though the data suggests homebuyers may have better luck in 2024, analysts do warn that cautious optimism is the best sentiment.
“In 2024, the housing market will not be pandemic hot, nor monetary-tightening cold, but it may not be quite right either,” Mark Fleming at First American Financial recently noted.
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