November 14, 2024

West + Main Homes

Colorado, Colorado Springs, Minnesota, Mountains, National, North Carolina, Oklahoma

Mortgage Rates Fall to 6.78% Amid Postelection ‘Rate Volatility’

November 14, 2024

West + Main Homes

Colorado, Colorado Springs, Minnesota, Mountains, National, North Carolina, Oklahoma

Mortgage rates ticked down from 6.79% last week to 6.78% for a 30-year fixed home loan for the week ending Nov. 14, according to Freddie Mac.

“After a six-week climb, rates have leveled off, but overall affordability continues to be an issue for potential homebuyers,” said Sam Khater, Freddie Mac’s chief economist.

The downturn can be traced to the presidential election, which dominated headlines last week and sent the stock market into overdrive.

“The coming months could bring more mortgage rate volatility as reactions to the election and its implications move through the market,” says Hannah Jones, Realtor.com® senior economic research analyst.

As Americans brace themselves for what could be a wild economic ride as 2024 winds down, here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers.

Mortgage rates expected to climb higher

Once the elections were in the rearview mirror, all economic eyes turned to the Federal Reserve’s Open Market Committee, which met last Thursday.

The Fed cut the Federal Funds rate (the interest rate banks charge each other for short-term loans) by 25 basis points, to 4.5% from 4.75%.

While the Fed doesn’t set mortgage rates, Fed rates and mortgage rates tend to move in the same direction, which helps explain why mortgage rates sank this week. However, “the Freddie Mac rate for a 30-year mortgage continued to remain higher than many initially expected,” explains Realtor.com economist Jiayi Xu.

This “recent upward trajectory of mortgage rates could largely discourage sellers from listing their homes,” says Jones—especially given that roughly 84% of outstanding mortgages have a rate of 6% or lower.

And mortgage rates are expected to go even higher “as a result of postelection Treasury yields,” adds Jones.

Even so, the Realtor.com economic team continues to hold out hope that the largely frozen real estate market might begin to thaw.

“Despite still-high rates, a recent read on homebuyer and seller sentiment showed relatively rosy expectations,” says Jones.

About 64% of sellers consider now a good time to sell, and just 22% of respondents expect mortgage rates to climb.

“Only time will tell whether the market will reflect this optimism,” says Jones.

Median home prices fall slightly

Mortgage rates continue to seesaw while home prices remain flat, falling just 0.2% for the week ending Nov. 9 compared with the same week last year. (Listing prices hit a median of $424,950 nationwide in October.)

This is the 24th week in a row that the median list price was less than or equal to the same week of 2023.

However, when a change in the inventory mix toward smaller homes is accounted for, the median listing price per square foot increased by 1.7% the week ending Nov. 9 compared with the same week a year prior.

“The housing market has remained largely unaffordable to many would-be buyers over the last year,” says Jones.

Despite this, buyers have a glimmer of hope, with “nearly 20% of listings offering price cuts,” according to Xu.

Housing stock continues to rise

Fresh listings are always a boon for buyers, yet they rose by only 1.7% for the week ending Nov. 9 compared with a year ago.

Overall housing stock is also up, with 26.1% more homes for sale for the week ending Nov. 9 than the previous year. This marks 53 weeks with a higher number of homes listed for sale compared with the year before.

Even so, this week’s uptick in housing stock was lower than last week’s, marking the seventh week of slowing momentum and the lowest annual change since late March.

“Slowing listing activity and stifled buyer demand has resulted in slowing inventory growth,” explains Jones.

Nevertheless, if mortgage rates decrease, it could boost buyer demand, which could eat into the recent buildup of housing stock.

Homebuyers are slow to act

Buyers might have taken a break from their house hunt last week to focus on the election—and the economic fallout—as homes spent nine more days on the market for the week ending Nov. 9 year over year. (In October, homes spent a median of 58 days on the market.)

“Generally, buyers have been holding off, waiting for more affordable housing conditions,” says Jones.

The recent bounce-back in mortgage rates that had been edging closer to 6% might be disappointing for homebuyers hoping for a year-end dip.

However, they can benefit from other buyer-friendly market trends, such as “the highest inventory since December 2019 and the slowest seasonal market in five years,” says Xu.

Read more at Realtor.com

Related Links

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.

Search Homes in Colorado

Search Homes in North Carolina

Search Homes in Oklahoma

Search Homes in Minnesota

October 24, 2024

West + Main Homes

Colorado, Colorado Springs, Minnesota, Mountains, National, North Carolina, Oklahoma

What To Expect from Mortgage Rates and Home Prices in 2025

October 24, 2024

West + Main Homes

Colorado, Colorado Springs, Minnesota, Mountains, National, North Carolina, Oklahoma

Curious about where the housing market is headed in 2025?

The good news is that experts are offering some promising forecasts, especially when it comes to two key factors that directly affect your decisions: mortgage rates and home prices.

Whether you’re thinking of buying or selling, here’s a look at what the experts are saying and how it might impact your move.

Mortgage Rates Are Forecast To Come Down

One of the biggest factors likely affecting your plans is mortgage rates, and the forecast looks positive. After rising dramatically in recent years, experts project rates will ease slightly throughout the course of 2025 (see graph below):

While that decline won’t be a straight line down, the overall trend should continue over the next year. Expect a few bumps along the way, because the trajectory of rates will depend on new economic data and inflation numbers as they’re released. But don’t get too hung up on those blips and reactions from the market as they happen. Focus on the bigger picture.

Lower mortgage rates mean improving affordability. As rates come down, your monthly mortgage payment decreases, giving you more flexibility in what you can afford if you buy a home.

This shift will likely bring more buyers and sellers back into the market, though. As Charlie Dougherty, Director and Senior Economist at Wells Fargo, explains:

“Lower financing costs will likely boost demand by pulling affordability-crunched buyers off of the sidelines.”

As that happens, both inventory and competition among buyers will ramp back up. The takeaway? You can get ahead of that competition now. Lean on your agent to make sure you understand how the shifts in rates are impacting demand in your area.

Home Price Projections Show Modest Growth

While mortgage rates are expected to come down slightly, home prices are forecast to rise—but at a much more moderate pace than the market has seen in recent years.

Experts are saying home prices will grow by an average of about 2.5% nationally in 2025 (see graph below):

This is far more manageable than the rapid price increases of previous years, which saw double-digit percentage growth in some markets.

What’s behind this ongoing increase in prices? Again, it has to do with demand. As more buyers return to the market, demand will rise – but so will supply as sellers feel less rate-locked.

More buyers in markets with inventory that’s still below the norm will put upward pressure on prices. But with more homes likely to be listed, supply will help keep price growth in check. This means that while prices will rise, they’ll do so at a healthier, more sustainable pace.

Of course, these national trends may not reflect exactly what’s happening in your local market. Some areas might see faster price growth, while others could see slower gains. As Lance Lambert, Co-Founder of ResiClub, says:

“Even if the average national home price forecast for 2025 is correct, it’s possible that some regional housing markets could see mild home price declines, while some markets could still see elevated appreciation. That has been, after all, the case this year.”

Even the few markets that may see flat or slightly lower prices in 2025 have had so much appreciation in recent years – it may not have a big impact. That’s why it’s important to work with a local real estate expert who can give you a clear picture of what’s happening where you’re looking to buy or sell.

Bottom Line

With mortgage rates expected to ease and home prices projected to rise at a more moderate pace, 2025 is shaping up to be a more promising year for both buyers and sellers.

If you have any questions about how these trends might impact your plans, connect with a local agent. That way you’ve got someone to help you navigate the market and make the most of the opportunities ahead.

Read more at KeepingCurrentMatters.com

Related Links

If there is a home that you would like more information about, if you are considering selling a property, or if you have questions about the housing market in your neighborhood, please reach out. We’re here to help.