Mortgage rate drop lures skittish buyers back to housing market, report shows
2024.08.08 15:36
(Reuters) – A drop in mortgage rates to over one-year lows has prompted some prospective buyers to resume house-hunting, a report from real estate brokerage Redfin (NASDAQ:) showed on Thursday.
WHY IT’S IMPORTANT
As of Aug. 7, the popular 30-year fixed mortgage rate is near its lowest levels in months at 6.58%, after a weaker-than-expected jobs report stoked recession fears. Despite the small improvement in affordability, pending sales still posted their biggest year-over-year decline in nine months, the Redfin report said.
However, the rate drop is luring some prospective buyers back to the housing market, especially with home prices falling from their peak, triggered by an affordability crisis.
CONTEXT
More home buyers are entering the market following a period of depressed demand when mortgage rates went over 7%.
On the supply side, new listings are regaining some of the momentum they had lost in recent weeks. For months now, home owners had been holding onto lower fixed mortage rates secured on properties during an era of cheap debt in the face of higher rates currently.
BY THE NUMBERS
– The median sale price was $389,750 during the four weeks ended Aug. 4, more than $6,000 below early July’s all-time high.
– While that’s a typical seasonal decline, the year-over-year increase of 3.2% is the smallest in nine months, indicating that price growth has eased slightly.
– New listings of homes for sale are up 5.9% year over year, the biggest increase in five weeks.
KEY QUOTE
“Many of the buyers I’m working with are excited because they’ve been casually house hunting for a year, waiting for rates to come down before they make an offer. Now a lot of those buyers want to get in … before rates get too low and cause more competition,” said Shoshana Godwin, Redfin premier agent.
