Mortgage Rates Just Fell Again—but the News Gets Even Better
Mortgage rates inched slightly lower this week, marking the fifth straight week of declines.
For the week ending April 13, 30-year fixed-rate mortgages averaged 6.27%, down from 6.28% in the prior week, Freddie Mac announced on Thursday. That’s still substantially higher than a year ago, though, when they averaged 5%.
But that might change over the coming months, thanks to a government report out Wednesday showing that overall inflation had dropped a bit in March.
“Calmer inflation means lower mortgage rates, eventually,” Lawrence Yun, chief economist for the National Association of Realtors®, said in a release responding to the inflation report.
Furthermore, he predicts the news will get even better in the coming months: “Mortgage rates slipping down to under 6% looks very likely toward the year’s end.”
We’ll explore what this all means for buyers and sellers in this installment of “How’s the Housing Market This Week?”
Can lower mortgage rates save the housing market in Coachella Valley?
Yes, real estate listing prices are still gaining. For the week ending April 8, they were 3.2% higher than a year earlier. But those gains are getting smaller and smaller, week by week, and Realtor.com economists have previously forecast an outright price decline by the summer.
“These modest declines mean a bit of relief for home shoppers relative to the end of 2022,” notes Danielle Hale, Realtor.com® chief economist, in her weekly analysis.
But with both prices and rates still elevated, there’s no way around it: “Affordability continues to be a challenge,” Hale says.
Some buyers are so deflated by this news, many have simply decided to throw in the towel for now. A recent survey from U.S. News & World Report found that two-thirds of homebuyers are holding off on house hunting until mortgage rates drop.
As for how low they need to go to get buyers moving, 28% said they will resume home shopping once rates drop below 6%; 30% plan to wait until they go below 5.5%; and an optimistic 26% say they’ll abstain until rates fall below 5%. However, experts say this is not likely to happen in 2023, so these homebuyers might be waiting a very long time.
How mortgage rates are affecting home sellers in Coachella Valley?
It’s not just homebuyers who are waiting for mortgage rates to drop.
“Homeowners appear to be well aware of the change in conditions, and a greater number are choosing to sit on the sidelines rather than list their home for sale,” observes Hale.
For the week ending April 8, the number of newly listed homes was down by 32% versus the same time last year, although the spring holidays might have skewed some of that activity.
“Nevertheless, the number of newly listed homes remains a weak spot in the 2023 housing market,” Hale adds.
Any homeowners who are on the fence about whether or not to list might want to hustle: Realtor.com economists have determined that this coming week, April 16–22, is the best time to list a home for sale in 2023. Still, many might have decided to wait this year out.
The homes that are on the market continue to linger longer. In the most recent week, they were on the market for 19 days longer, on average, than a year ago. And the longer these listings sit, the larger inventory grows overall, with the total number of active listings (new and old) up 44% compared with a year earlier.
Clearly, the housing market needs some help to get unstuck. Whether mortgage rates will drop enough to get things rolling remains to be seen.