December witnessed a significant surge in optimism regarding mortgage rates, as revealed by Fannie Mae's monthly consumer survey. Notably, more homeowners now anticipate a decrease in rates rather than an increase. "A more optimistic rate outlook among consumers may signal an expectation that home affordability pressures will ease in 2024. Homeowners have told us repeatedly of late that high mortgage rates are the top reason why it's both a bad time to buy and sell a home," said Mark Palim, Vice President and Deputy Chief Economist at Fannie Mae.
This appears to be kickstarting the housing market. As Altos Research reports, the number of sales happening each week is climbing right along with the inventory.
-
- 13% more new contracts were started this first week of January compared to last year
- New listings are up 9% YoY, though inventory is still tight
- Altos Research anticipates 15% growth in home sales in 2024 over 2023
- Total mortgage applications rose 3% month-to-month
- Applications to refinance a home loan jumped 19% from the previous week and were 30% higher than the same week one year ago
Our Take
We weren’t expecting such a fast start to the housing market this year, we are happy to have been wrong on that! Even though mortgage rates are significantly higher than a year ago, they’ve dropped from 8% in October to about 6.5% today, which has motivated both buyers and sellers.
Nationally, we have seen a 13% increase in new contracts compared to last year and new listings are up 9% YoY. Clearly, we don’t need mortgage rates to fall to the extraordinarily low levels we saw during the pandemic to see the market pick up.