Homebuyers will save $100 a month after mortgage rates saw their biggest weekly drop since 1981.
The 30-year fixed rate fell to 6.6% as inflation slowed. A week ago the rate was above seven percent while 12 months ago the rate for a 30-year fixed rate was 3.1 percent.
According to Redfin, the drop saves new homebuyers $100 a week. The real estate company said the average mortgage payment in the United States fell from $2,542 to $2,430.
The Fed is trying to rein in the highest inflation in decades by making it harder to borrow and cutting spending.
Several major measures of inflation showed prices easing a bit, but other economic indicators show consumers remain resilient, as does the labor market.
The 30-year fixed rate fell to 6.6% as inflation slowed, saving the average family $100 a month
Experts have warned that property prices will remain volatile over the next 12 months
The company’s deputy chief economist, Taylor Marr, said in a press release: “Serious buyers who need to buy a home as soon as possible can feel good about swooping down on a home this week, knowing that it could cost them up to $100 less per month than the same house would have cost if they had signed the agreement a week earlier.
He continued: “More casual buyers may want to wait a few more months, as there is reason to be cautiously optimistic that the worst of inflation and high rates are behind us, and monthly payments could drop further.”
That sentiment was echoed by George Ratiu, head of economic research at Realtor.com, who told Money Wise: “Some buyers may want to wait and see if rates drop even lower.”
He continued: “However, with inflation still north of 7% and the Fed committed to continuing to raise the funds rate over the coming months, the mortgage market is not out of the woods. We could still see rates rebound above 7% before the end of the year.
The 15-year fixed rate is also down to 5.9% from 6.3%. This time last year, the rate was 2.3 percent.
Despite these declines, National Association of Realtors senior economist Nadia Evangelou told Money Wise: “At 7%, 1 in 8 renters can afford to buy the house at the median price. In contrast, nearly one in three renters could afford to buy the home at the median price a year earlier, when rates were close to 3%.
“So around 7.9 million renters can no longer afford the typical house, while at the same time the share of first-time buyers has hit a new high,” Evangelou said.
Several reports have suggested that mortgage prices will remain unpredictable through the end of 2022, with house prices still high across the country.
Sales of existing homes (above) fell 5.9% last month from September to a seasonally adjusted annual rate of 4.43 million, the National Association of Realtors said on Friday.
Despite the sharp slowdown in transactions, the national median home price rose 6.6% in October from a year earlier, to $379,100. Prices rose in all four regions
The central bank’s strategy risks sending the economy into recession if it slows down economic growth too much.
According to data released Thursday, housing starts fell more than four percent to 1.4 million units.
A day earlier, data from the National Association of Home Builders showed confidence in the single-family home market was at a 12-month low. It marks 11 months of steady decline in confidence, the group said.
In a statement on their website, NAHB President Jerry Konter said: “Rising interest rates have significantly weakened demand for new homes as buyer traffic becomes increasingly scarce. “
Konter also said, “With the housing sector in recession, the Biden administration and the new Congress must focus on policies that reduce the cost of construction and allow homebuilders nationwide to increase housing production. .”
According to Wells Fargo, about 37% of homebuilders have cut prices while 59% of homebuilders are using other methods to try to entice new home buyers.
Along with the further rate cut, mortgage applications rose 2.7% from last week, in addition to a 4% increase in home purchase applications.
Palm Beach-based broker Kevin Kent further explained the impact of lower mortgage rates.
He told WPBF: “It can make a big difference. A 1% adjustment typically impacts about $100,000 of what people can afford to buy and stay at the same budget level, at the same payment level. It can make a big difference, you know. I’ll tell you, these are prospects.
He continued, “When I started in real estate, interest rates were 14%…17%. And people were still buying and selling houses. It’s a different way of approaching the market right now. So any drop like that is going to help a lot of buyers who have been frustrated.
To put it another way, a homebuyer with a monthly budget of $2,500 can afford a $380,750 home at current rates of 6.6%, giving them $12,000 of power. purchase more than a week ago.
This same buyer could have bought a house for $368,750 with rates of 7% last week.
Home hunters had fewer properties to choose from last month as the inventory of homes on the market shrank for the third month in a row.
Some 1.22 million homes were on the market at the end of October, representing 3.3 months of supply at the current monthly sales rate, NAR said.
“Inventory levels are still tight, which is why some homes for sale are still getting multiple offers,” Yun noted.
“In October, 24% of homes received more than the asking price. Conversely, houses that remained on the market for more than 120 days saw their prices fall by an average of 15.8%,” the economist said.
Sixty-four percent of homes sold in October 2022 had been on the market for less than a month.
First-time buyers accounted for 28% of purchases, compared to 29% in September and a year ago. Cash sales accounted for 26% of transactions, down from 24% a year ago.
The report follows news on Thursday that single-family home construction and future building permits fell to the lowest levels since May 2020.
#Mortgage #rates #register #biggest #weekly #drop #YEARS #inflation #slows