House buying to gain momentum… soon
Even a tiny drop in mortgage rates is enough to indicate that house-hunting season will start soon, according to a new Redfin report.
The report noted that the median US monthly mortgage payment was $2,587 during the four weeks ending August 18, its lowest level since February and down 0.1% from a year earlier.
“Housing payments are falling because mortgage rates are falling; weekly average mortgage rates are sitting at a 15-month low of just below 6.5%, down from a peak of 7.2% in May. Home prices are still near record highs, up 3.6% year over year,” the report stated.
Meanwhile, mortgage rates in the entire US have been “holding steady” at 6.5% since the start of this month, the report noted.
Almost there… but not yet
Although there’s a downtick in mortgage payment rates this August, it’s not the start of the buying season just yet.
The report noted that some would-be buyers are still waiting for a further drop in mortgage payments, which they perceive will not happen anytime soon. Meanwhile, some want to be positive that rates will not be shooting up before they put an offer in on a home.
A slight increase in home tours has not translated to more sales yet, the report stated.
“Pending home sales are down 5.3% year over year, the biggest decline in nine months (with the exception of the four weeks ending August 4), and mortgage-purchase applications are down 8%. But pending sales are a lagging indicator, and they may improve as home tours pick up, and Redfin agents report they’ve seen an uptick in buyer interest,” the report stated.
A positive economic outlook triggers optimism
On the other hand, the US’s positive economic outlook and the speculation that the Federal Bank will implement another rate cut soon have triggered optimism among both house buyers and sellers, according to the Redfin report.
“Over the last two weeks, I’ve seen momentum build and I’ve felt clients get more excited about the prospect of buying or selling a home,” commented Redfin Premier agent for Los Angeles Gregory Eubanks. “That stems from encouraging economic news and speculation that the Fed is going to cut interest rates in September. Some people are actively searching and listing their homes right now, and others are still hoping rates drop more significantly before making a move.”
Meanwhile, on the supply side, new listings have increased by 3.4% year-over-year.
With the August 17 implementation of the National Association of Realtors (NAR) settlement, the number of new listings is expected to spike as it inspires some sellers to list their homes, in hopes of a lower fee, the report noted.
To read the complete Redfin report, please follow this link.
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