Real Estate Rundown December 2023
Photo credit Tracy Adams via Unspash
A New Record in the Housing Market
Realtor.com's latest report reveals a positive turn in the housing market, with 7.5% more home sellers listing their properties in November compared to the same month last year. This marks the first annual growth in newly listed homes in 17 months, ending a four-month streak of annual inventory declines. Seasonal housing stock in November increased by 2.4% above October levels, a first since records began in 2016. However, the surge in home listings comes with increased costs, as the median home price reached $420,000 in November, up 1% from the previous year. Higher mortgage rates have pushed up the monthly cost of financing setting a record, requiring a yearly income of around $118,000 for comfortable affordability. Despite increased listings, total housing inventory is still 37.8% below typical levels from 2017 to 2019. Nevertheless, 20 out of the 50 largest metros experienced inventory growth in November, offering some optimism for homebuyers
The American Dream is Still Strong
Despite challenges such as higher inflation, soaring mortgage rates, economic uncertainty, and environmental concerns, a recent survey by Falls & Co. reveals that 89.5% of millennials aged 25-44, in their prime homebuying years, believe in achieving the American Dream of owning a home. Less than one percent stated that owning a home was not financially feasible or important. Emotional factors dominate their motivation, with 63% expressing a desire to own a home simply because they like the idea, while 44% view homeownership as an investment for wealth-building. Big life events like marriage and having children also play a role. Preferences lean toward detached single-family homes, with a focus on reasonable commutes, bedroom count, and square footage.
Mortgage Rates See a Decrease
Mortgage rates saw a decline this week, attributed to a key Federal Reserve official, Christopher Waller, a member of the Federal Open Market Committee. Waller expressed concerns about slower economic activity and downside inflation risk, indicating that Fed policy was restrictive and financial conditions were tighter than in the first half of the year. With inflation moving toward the Fed's 2% target, there's a likelihood of a Fed policy pivot to prevent monetary policy from becoming more restrictive and causing an economic downturn. The direction of long-term interest rates, including mortgage rates, will depend on expected inflation and economic growth. If core inflation and economic activity continue to moderate, mortgage rates may start to level off, providing relief for prospective homebuyers. However, upcoming employment reports could impact rates, especially if there's higher-than-expected wage growth in November.
According to Freddie Mac's recent Primary Mortgage Market Survey, it was reported that the 30-year fixed-rate mortgage averaged 7.29 percent as of November 22, 2023, showcasing a decrease from the previous week's 7.44 percent. Chief Economist Sam Khater noted that mortgage rates have declined by half a percent in recent weeks, but potential homebuyers are still waiting for further reductions and increased housing inventory. This trend is reflected in the latest data revealing a thirteen-year low in existing home sales. A year ago, the 30-year FRM averaged 6.58 percent, emphasizing a notable increase over the past year. Additionally, the 15-year FRM averaged 6.67 percent, down from the previous week's 6.76 percent, and considerably higher than the 5.9 percent reported a year ago at the same time.
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Categories: Moving Industry News, Real Estate News