Not only did spiking mortgage rates prompt the Pandemic Housing Boom to fizzle out in the summer of 2022, they also pushed housing market transactions into free-fall mode. By December, mortgage purchase applications were down over 40% on a year-over-year basis.
But there might finally be some good news for builders and agents: Researchers at Capital Economics believe housing market activity is bottoming out.
There’s a growing optimism among brokers and agents across the country. They're hoping that loosening financial conditions, which saw the average 30-year fixed mortgage rate fall from 7.37% to 6.09% over the past two months, will help to give the looming spring season a little juice.
Let's be clear: Even if housing market activity (i.e. home sales) have indeed bottomed, it doesn't guarantee that home sales will have a swift recovery. After all, housing affordability remains ”pressurized” to a historic degree. That'll happen when U.S. home prices soar 41% in just over two years and mortgage rates spike from 3% to over 6% in just a 12-month span.
Comments