In a year of housing market horrors for buyers, now may be the best time to buy, according to a new analysis from Redfin.
In the last three weeks, rates have sunk from 8% to 7.4%, giving buyers breathing room after a succession of rate increases. Just last week, the 30-year fixed mortgage rate dropped by 25 bps, the largest single-week decline since July 2022.
At the same time, though inventory remains low it is on the rise. New listings were up 1.5% YOY at the beginning of November, only the second stock increase in more than a year.
Plus, with demand slowing as rates priced more buyers out of the market, the number of sellers cutting prices is on the rise, giving buyers the opportunity to negotiate for a better deal.
Redfin notes that this may be the only moment all three of these factors favor buyers, pointing out the possibility of further rate increases if economic indicators turn against the Fed in the next few months. For example, if the November 14 CPI report shows higher-than-expected inflation, rates may go up yet again.
“I’m advising buyers to lock in a mortgage rate as soon as they drop to a number where they can make the math work,” said Seattle Redfin Premier agent Hal Bennett.
“Payments could go up hundreds of dollars overnight if the winds shift on mortgage rates, and all of a sudden you won’t be able to afford the home you want or you won’t qualify for a mortgage. This window of opportunity could be narrow.”
A Seattle buyer would pay $4,984 monthly for a $775,000 home with a 7.4% mortgage rate but shell out $5,240 with an 8% rate, for instance.
Mortgage applications were up 2.5% last week as buyers rushed to lock in sub-8% rates, but they are still low.
“Last week’s decrease in rates was driven by the U.S. Treasury’s issuance update, the Fed striking a dovish tone in the November FOMC statement, and data indicating a slower job market,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
“Applications for both purchase and refinance loans were up over the week but remained at low levels. The purchase index is still more than 20% behind last year’s pace, as many homebuyers remain on the sidelines until more for-sale inventory becomes available.”
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