Weak employment statistics also contributed to the decline in interest rates. (iStock)
Mortgage rates fell sharply this week, reaching their lowest levels in more than a year. According to Freddie MacThe average interest rate on a 30-year fixed-rate mortgage is 6.47%, down from 6.73% last week.
“Mortgage rates plummeted to their lowest level in more than a year this week as a continued strong economy was likely an overreaction to poor jobs data and financial market turmoil,” said Sam Carter, chief economist at Freddie Mac.
At the same time last year, the average interest rate on a 30-year mortgage was 6.96%, indicating that interest rates are finally starting to approach the 6% mark.
Interest rates on 15-year mortgages also fell sharply, dropping from 5.99% to 5.63%. Last year’s rates were much higher at 6.43%.
“Lower mortgage rates should increase the purchasing power of prospective homebuyers and begin to spur their buying enthusiasm,” Carter said. “Moreover, these lower rates are already providing refinancing opportunities for some existing homeowners, with the refinance share of mortgage applications in the market reaching nearly 42%, the highest since March 2022.”
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Average down payment for typical U.S. home purchase hits $127,750: ZILLOW
The election is impacting buyers’ timelines
The upcoming presidential election is impacting the home buying market. Veteran Home Buying ReportThis was found in a survey conducted by Veterans United Home Loans, which asked veterans, active-duty military and civilians how the election affected their decision to buy a home.
Nearly 60% of people who plan to buy a home in the next few years said the current election is a factor in when they will buy, while about 38% plan to wait until after the election to buy.
“The upcoming election is clearly weighing on the minds of potential homebuyers,” said Chris Burke, vice president of mortgage lending at Veterans United Home Loan. “Americans are considering the potential impact of political changes on the economy and housing market, and many are adjusting their buying schedules accordingly.”
Many buyers are waiting to see what happens in the market after the election results are finalized. All survey respondents cited inflation and home affordability as the top issues in the election, both of which will have a profound effect on the housing market.
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Mortgage payments surge for homebuyers in battleground states: REALTOR.COM
Low housing prices and politics are driving more homebuyers to move to disaster-prone areas
A few years ago, Americans were moving out of disaster-prone states by the thousands. That trend has now reversed, especially in states like Texas and Florida. High-fire-risk counties, many of them in Texas, are expected to see more than 63,000 people move out rather than move in by 2023. Redfin Survey Found it.
Flood-hit counties also saw a large influx of more than 16,000 people, many of them to Florida, where insurance costs are high. But there are other factors driving the exodus.
“Rising insurance costs and intensifying natural disasters are driving thousands of Americans out of dangerous areas, but they are quickly being replaced by others for whom climate change is not their top concern,” said Elijah de la Campa, senior economist at Redfin.
“For many Americans, factors like the cost of living and proximity to family trump less immediate, more abstract catastrophe risks,” de la Campa says. “But in places like California and Florida, the cost-benefit calculation appears to be shifting, as rising home insurance premiums and an increase in high-profile disasters have tangible effects on residents and make national news.”
More than 50% of people moving to high-flood-risk areas in 2023 were in Florida, a high figure for the state but down slightly from 57.3% in 2022. Meanwhile, five of the 10 high-fire-risk counties to which Americans moved were in Texas.
“While flooding is Houston’s main weather issue, the main reason I’m leaving is the heat,” explains Nicole Nodars, a real estate agent with Redfin Premier. “But a lot of people still move here for the low cost of living and good politics. But homeowner’s insurance is a big issue. It’s a lot more expensive than it used to be, and many people who put in 30-year roofs are now having to replace them after 15 years because some insurance companies won’t cover homes with roofs older than that.”
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Many homes remain on the market and price declines are frequent
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