{"id":174029,"date":"2023-02-17T09:08:00","date_gmt":"2023-02-17T16:08:00","guid":{"rendered":"https:\/\/inbusinessphx.com\/?p=174029"},"modified":"2023-02-17T09:08:00","modified_gmt":"2023-02-17T16:08:00","slug":"housing-market-recovery-stalls-as-mortgage-rates-jump-says-report","status":"publish","type":"post","link":"https:\/\/staging.inbusinessphx.com\/?p=174029","title":{"rendered":"Housing Market Recovery Stalls as Mortgage Rates Jump, Says Report"},"content":{"rendered":"
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Some homebuyers are retreating back to the sidelines as mortgage rates ascend toward 7%, according to a new report<\/a> from Redfin<\/a>, the technology-powered real estate brokerage.<\/div>\n<\/header>\n
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Redfin\u2019s Homebuyer Demand Index\u2014a measure of requests for tours and other services from Redfin agents\u2014fell 1% from a week ago, the first decline after a month of increases, and mortgage-purchase applications dropped 6%.<\/p>\n

Persistently low inventory is also contributing to the slump in demand, as prospective sellers are also sensitive to rate hikes: 85% of mortgage holders have a rate far below 6% and many are eager to hold onto it. Although the decline in new listings of homes for sale has slowed since December, they were still down 17% from a year earlier during the four weeks ending February 12. Asking prices posted their smallest increase since the start of the pandemic (+1.2% year over year) as those who are <\/i>selling homes attempt to attract buyers.<\/p>\n

The bump in mortgage rates is largely due to this week\u2019s inflation report, which was full of mixed signals. Inflation eased ever-so-slightly in January, but the overall price of goods and services is still much higher than a year ago and the pace of economic recovery has slowed.<\/p>\n

\u201cThe somewhat disappointing inflation numbers put a wet blanket on homebuyers after sub-6% rates lit a fire under them a few weeks ago,\u201d said Redfin Economics Research Lead Chen Zhao. \u201cInflation is cooling too slowly\u2014and the job market and retail sales are too strong\u2014for the Fed to ease up on interest-rate hikes, which means mortgage rates are unlikely to fall much in the next few months. That doesn\u2019t erase the progress we\u2019ve made and it doesn\u2019t mean rates will soar past 7%. But it is a reminder that the housing-market recovery will remain touch-and-go until we see inflation and the overall economy improve for a longer duration.\u201d<\/p>\n

The inconsistent nature of the comeback is evident in this week\u2019s data, which shows that although buyers have taken a step back, they\u2019re still more active than they were last fall. Redfin\u2019s Demand Index is up 17% from the low point it fell to this past fall when mortgage rates peaked at over 7%. Pending home sales also continue to improve; they\u2019re down 18% year over year, but that\u2019s roughly half of the 33% decline in November. Redfin agents report there\u2019s strong demand for move-in ready, well-priced homes in desirable neighborhoods.<\/p>\n

\u201cHomes that are priced well are still getting multiple offers, but I did notice buyers making fewer offers this week as interest rates crept back up,” said Los Angeles Redfin agent Justin Vold. \u201cBuyers have been hypersensitive to rates since the start of the pandemic. In today\u2019s topsy-turvy market, I\u2019m advising people to take a step back from day-to-day rate fluctuations and consider their long term needs. If someone is planning to stay in a home for many years and they can afford today\u2019s interest rates, now is a perfectly good time to buy because there\u2019s relatively little competition.\u201d<\/p>\n

\u201cBut it may not be the right time for someone who\u2019s only looking for a short-term home and\/or can barely afford to pay their mortgage with 6% or 7% interest,\u201d Vold continued. “Buyers need to be ready to keep the original payment for all 30 years of their loan because although rates will inevitably come down, we don’t know when that\u2019ll happen. When the opportunity to refinance does come around, shaving off part of the monthly payment will be a bonus.”<\/p>\n

Leading indicators of homebuying activity:<\/b><\/p>\n