Step Inside The Market - Week 33, 2023

StepInside Weekly 8/17

Hello Everyone,

In this week’s recap, we will focus on the current trends within the residential real estate market, some updates on homeowner sentiment.

🫤 The last few weeks have been very hard on the real estate and mortgage markets as interest rates continue to rise. Rates have crossed back over the 7% range and now sit 7.16%, up from 7.09% last week.

• Rates now are matching 22-year highs and due to this we have seen both purchase and refinance applications decline week-over-week.

• Overall, purchase applications are down 26% and refinance application 35% year-over-year

• The main driver is the continued rise of the US Treasury, namely the 10 year. Early indications from the Fed is that they may not be done raising rates as the inflation battle is still ongoing!

😰 With rates hitting multi-decade highs, here are some interesting items to consider:

• America's mortgage payments are 19% more expensive than new mortgages from one year ago according to RedFin

• Today’s 7.16% interest rate on a $417,200 loan would yield the same payment as a loan of $670,000 one year ago this week, Per ING’s chief international economist, James Knightly!

As we continue to see rates rise and housing inventory shrink, homebuilder sentiment dropped 6 points to 50 this month. Anything over 50 is positive and anything below 50 is negative sentiment.

• Additionally, 25% of homebuilders have been cutting prices, which is 3% higher than July.

• With rates as high as they are and buyer traffic declining, it's unlikely we will see much positive momentum for homebuilders as we enter the second half of Q3 and Q4.

Thanks for reading this weeks SITM. Comment your thoughts below we would love to hear from you!