New Opportunities in a Changing Housing Market
Homebuyer activity in December took a noticeable dip, with signed contracts on existing homes falling 5.5% from November and 5% from the previous year, according to the National Association of Realtors. This marks the first decrease after four consecutive months of gains, bringing the index to its lowest point since August. Pending sales, which predict future closings, are the most current indicator of market activity, and the drop may be tied to the rise in mortgage rates in December. The average rate on a 30-year fixed mortgage climbed from 6.68% to 7.14% during the month, and the 7% mark seems to be a psychological barrier for many buyers.
While new home sales saw some growth in December, builders have been offering incentives, like buying down mortgage rates, to boost demand. Pending sales declined across all regions, with the West and Northeast seeing the steepest drops, at 8.1% and 10.3%, respectively. These areas, known for their high home prices, are especially sensitive to higher mortgage rates, which have reduced affordability.
Despite the slowdown in pending sales, home prices remain high, with national prices continuing to rise, as noted in the S&P Case-Shiller national home price index. In January, mortgage applications were down 7% compared to the same time last year, and homes are taking longer to sell. According to Redfin, typical home listings now take 54 days to go under contract—the longest period since March 2020.
On the bright side, the market is showing signs of improvement, with new listings rising by 37% in January compared to December. This increase in available homes could be the start of a shift, helping to ease the current tension between buyers and sellers. While the influence of lower fall mortgage rates may start to fade, the rise in listings signals that opportunities are beginning to open up. As the market adjusts, this could be a great time to explore your options and find the right home for you!
If you’re ready to navigate these changes and make your next move, I’m here to help. Don’t hesitate to reach out today!
