Daniel Hale, Chief Economist at Realtor.com, analyzes home prices on Maria Bartiromos Wall Street.
As mortgage rates rose toward 8% last fall, the pandemic-era booming housing market slumped and demand hit its lowest level in nearly 30 years.
The average interest rate on a 30-year fixed mortgage is now more than a percentage point lower than its October peak, meaning more would-be sellers are likely to buy, which will likely ease the ongoing inventory shortage. Expectations are high.
Tuesday, April 4, 2023 at a home in Centerville, Maryland. The U.S. housing market is experiencing severe inventory shortages as many homeowners are reluctant to move. (Photographer: Nathan Howard/Bloomberg via Getty Images / Getty Images)
While there have been some signs that the real estate market may be making a comeback, the latest data shows it’s actually getting worse.
Kobisi Letter this week shows that despite falling interest rates, demand for mortgages fell 14% year-on-year last month and 40% from pre-pandemic levels, the lowest level in 30 years, Leventure Consulting reported. We have published an analysis of
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Meanwhile, the available housing supply remains a significant 34.3% lower than its typical pre-crisis amount. COVID-19 pandemic It started at the beginning of 2020.
So why are more homeowners reluctant to move? Perhaps the question is ‘Why do they do that? ” should be the answer. ”
“Even if mortgage rates have fallen from 8% to 6%, many homeowners are choosing not to move for financial reasons.” Kobeisi Letter, in a post on X, says that 90% of borrowers still He pointed out that mortgage interest rates are below 5%.
Tuesday, December 6, 2022 at a residence in Rocklin, California. High interest rates and soaring home prices are discouraging homeowners from taking action. (Photographer: David Paul Morris/Bloomberg via Getty Images/Getty Images)
At the same time, many homeowners aren’t just hesitant about rising interest rates. Housing prices continue to rise, and the housing affordability crisis is worsening.
U.S. home prices hit a new record high in November, marking the 10th consecutive month of increases. This problem is not likely to be resolved any time soon.
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“More significant improvements in mortgage rates are needed to attract more sellers to the market,” Realtor.com economist Jiayi Xu said in a statement. “If for-sale inventory fails to meet buyer demand, prices may begin to rise again and home price increases may continue.”
Wednesday, August 16, 2023 at a residence in Hercules, California. Mortgage rates have fallen by more than 1 percentage point since October, but not enough to boost demand for housing. (Photographer: David Paul Morris/Bloomberg via Getty Images/Getty Images)
The Kobeisi Letter predicts that interest rates will need to fall significantly for the housing market to get serious again.
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“Interest rates would need to fall below 5% to stimulate meaningful demand in the housing market,” the analysts wrote. “Until then, there will be a historically undersupplied market and prices will be high.”
FOX Business’ Megan Henney contributed to this report.
