Step Inside The Market - Week 29, 2023

StepInside Weekly 7/20

Hello Everyone, ☀️

👀 Step Inside the Real Estate Market With us!

In this week’s recap we will focus on the current trends within the residential real estate market, the potential issues facing the middle-class with increased mortgage payments, and some positive news about home builder sentiment!

✅Over the last week, the average contract interest rate for a 30 year fixed mortgage decreased from yearly highs of 7% to 6.78%.

• The main reason is the positive inflation news from earlier this week but as long as inflation remains above the key target of 2%, we are likely to see further Fed Rate hikes which may negatively impact rates in the coming weeks.

🫤 Even though we saw a drop in rates, mortgage applications had mixed results with refinance applications up 7% over the previous week (but still down about 30% from last year) while Purchase applications dropped by 1% (and down 21% from a year ago).

• We are likely to continue to see mixed results as rates drift slightly up and down week over week. However, until the purchase market sees an influx of new properties for sale we are unlikely to see sustained positive momentum on the purchase side.

🚷With mortgage rates still stubbornly high, compared to rates in 2020 and 2021, many new home buyers are potentially walking into a payment crisis by taking on high monthly payments with the thought that rates will radically decline in the near future. Per this interview with a loan officer, he thinks many homeowners are over anticipating rate changes which could come back to haunt them in the future.

• The historical trend for mortgage rates is between 6-7%, so to anticipate large downward swings is likely overly optimistic. If you have clients who are looking to buy, make sure they are seeing the big picture and not buying on a prayer for lower rates!

🏗📈 Home builder sentiment was on the rise in July and is quickly becoming the main force of new housing units hitting the market! Sentiment rose by 1% in July to 56, which marks seven consecutive months of increases.

😊 Thanks for reading. Feel free to comment your thoughts below, we would love to hear from other professionals!