Housing market is beginning to show signs of affordability returning in November Mortgage Refinance Demand Surged 6%

signs of affordability

First Indications of Affordability Emerged in November

The market is beginning to show signs of affordability returning. As mortgage rates declined in November and rents decreased by the most in at least seven years, the cost of a new mortgage decreased by 4.8%.

According to Zillow’s most recent Market Report, housing market activity has been at its most relaxed since the epidemic started. According to the data, a typical U.S. home’s monthly mortgage payment decreased by around $100 due to falling home values and lower mortgage rates.

It’s “unlikely affordability will significantly improve anytime soon,” according to Zillow, but the news from November is encouraging because it suggests that affordability may stabilize in 2023.

Housing Market Shows Signs of Balancing

The housing market is regaining equilibrium as buyers and sellers are on more equal footing at the current time. Neither buyers nor sellers appear to have the upper hand in negotiations. The November RE/MAX National Housing Report supports that. In the 53 surveyed metro areas, the data showed prices moderating and a 12% decrease in home sales from October’s figures.

The number of new listings fell to its lowest level of the year, down 21.4% from October. Also, houses for sale remain on the market for an average of 39 days. That was a full week more than November 2021 and four more days than October. The median sales price fell to $394,000, a 1.3% decrease from October but a 3.7% increase from November 2021.

According to the report, November’s inventory had a 2.5-month supply, up from 2.3 in October and more than double the 1.2 from a year earlier. The close-to-list price ratio was 98% on average in November, meaning residences typically sold for 2% less than the asking price. The percentage is unchanged from October 2022 and was 101% a year ago.

Mortgage Refinance Demand Surged 6%

While the latest decline in mortgage interest rates did little to increase demand from homebuyers, it prompted some homeowners to explore ways to reduce their monthly payments.

The Mortgage Bankers Association‘s seasonally adjusted index shows that the number of applications to refinance a mortgage increased by 6% last week compared to the week before. However, volume was still 85% lower than it was during the same period the previous year.

The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the U.S. is likely to enter a recession,” said Mike Fratantoni, MBA’s chief economist. “However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.

Next week’s potential market-moving reports are:

  • Monday, December 26th – No Report
  • Tuesday, December 27th – US Home Price Index (SAAR)
  • Wednesday, December 28th – Pending Home Sales Index
  • Thursday, December 29th– – Initial and Continuing Jobless Claims
  • Friday, December 30th – Chicago PMI

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