After a particularly difficult period, the frozen real estate market began to thaw.
Mortgage rates have dropped significantly, more homes are coming on the market, and sales are rising as buyers catch their sudden change in wealth.
Moody's Analytics (moody'Mark Zandi, chief economist at S Analytics, said: "The worst of the housing market is over. But "it will be a few years before the real estate market fully normalizes." ”
In fact, over the past two months, there have been many signs that the situation is changing dramatically.
Mortgage rates fell from more than 7% to around 6% in December, a major event that spurred home sales.
Mortgage applications were up 34 percent in the week ended Jan. 19 from four weeks ago, according to the latest data from the Mortgage Bankers Association.
From November to December, the number of new home sales increased by 8%, and the number of pending home sales increased by 83%。(This is based on the latest data from the U.S. Census Bureau, the U.S. Department of Housing and Urban Development, and the National Association of Realtors.) )
While mortgage applications were still down 17 percent year-over-year6%, but new homes and pending sales increased year-over-year. New home sales increased by 4 percent year-on-year4%, and sales of existing homes to be completed increased by 13%, a modest increase.
We are at a turning point," realtorcom Chief Economist Danielle Hale said. "This could be a sign that the market is opening up and we may see more people moving (buying and selling) this spring. ”
However, she was hesitant to announce that the real estate market had fully recovered. Resale market underperforms in December: Existing home sales (excluding new builds) fell 1% in December from November and 62%。
It's also important to remember that winter is usually a slow time for the real estate market. Compared to the same period last year, the economy was sluggish and didn't need much growth to make headlines.
"The market is definitely flashing positive signals," Hale said. "That doesn't guarantee that we'll continue to see that positive momentum. Much depends on the change in mortgage rates. ”
Mortgage rates are driving the housing market.
The improvement in the housing market is mainly due to lower mortgage rates. The lower the interest rate, the cheaper the monthly mortgage payment, which makes the idea of buying a home more appealing.
Charlie Dougherty, a senior economist at Wells Fargo who specializes in real estate, said: "Lower mortgage rates seem to be breathing life into the housing market. ”
If the Federal Reserve cuts interest rates several times this year, mortgage rates are expected to continue to fall. (Mortgage rates are separate, but tend to follow the same trajectory as the Fed's interest rates.) But many economists believe inflation will remain above 6% this year and could be volatile.
Hale**: Interest rates will go down, people will get excited, and then [interest rates] will **.
Even if interest rates are lowered, buying a house this year will not be cheap. Interest rates are still well above the 2021 low of 2%, and home prices are high. According to RealtorAccording to the latest data from com, the median listing price in December last year was $410,000.
"Affordability can still be an issue for homebuyers," Doherty said. "Prices still look like they're still there.
More and more homes are being listed**.
One of the biggest hurdles in the real estate market is the severe shortage of homes for sale. There are many more buyers eager to find their own home than **.
Luckily, more homes have entered the market in recent weeks. realtor.Data from com shows that the number of active** was up 8 percent in the week ended Jan. 20 from a year earlier6%。
This is the result of the homeowners deciding that it is time to list their possessions and move on with their lives. Lower interest rates over the past month may have helped propel them in this direction.
Builders are also doing their part. The National Association of Home Builders expects single-family home construction to grow by 5 percent this year compared to 20235%。
Danushka Nanayakara, assistant vice president in charge of NAHB, said: "Residential construction seems to have bottomed out and things look even better this year. "The real estate market will stabilize. ”
Home sales are picking up at an accelerated pace again.
Home sales were buoyant for a few years during the coronavirus disease 2019 (COVID-19) pandemic, when everyone seemed to know a lot of people who were buying homes, but the housing market came to a standstill as mortgage rates rose.
According to NAR, last year was the lowest year for home sales since 1995. (Only existing homes are included in the statistics.) More people bought houses at the height of the Great Recession – that's how bad it was.
Sales may well have bottomed out," Hale said.
Now, the tide has turned. But how long it will take for the market to be fully **, no one can say.
"Things will get better this year," Nanayakkara said. "Everybody is optimistic. ”
Matt Curtis, a real estate agent whose eponymous firm is based in the Huntsville, Alabama, area says he's noticed the change.
Since December last year, more and more homeowners have listed their properties**, and open homes are once again crowded with eager buyers.
People are used to 3 percent and 4 percent (mortgage) rates," he said. "They're just ready to look forward. ”
These are positive moves for the property market, which has been stagnant for much of 2023, although affordability remains a challenge for many potential buyers.
"The housing market is going to be a more normal year and look more like what we saw in 2018 and 2019," Doherty said. "That said, it's probably still pretty slow. ”