Housing Market Shows Signs of Improvement as Mortgage Rates Decrease and Listings Increase

According to Yahoo News, the housing market may be showing signs of improvement for potential buyers as mortgage rates decrease and listings increase, according to real estate brokerage Redfin. The interest rate on a 30-year fixed mortgage has dropped to 7.03%, as reported by government-backed lender Fannie Mae. This is down from its peak of just above 8% in early October, which was a 23-year high. In response to this change, Redfin states that mortgage applications have increased by 15% since early November, when they reached a 28-year low, and new listings of homes have risen by 7% compared to last year when interest rates were spiking. As a result, applications to purchase homes are on the rise. However, the housing market's recovery is not happening rapidly. Fannie Mae reported in a news release on Thursday that there are already signs of slowing growth in applications. Mortgage rates have recently decreased as investors become convinced that the Federal Reserve has stopped raising interest rates for the time being. From March 2022 to July 2023, the Fed raised its benchmark rate from just above zero to a range of 5.25% to 5.5%. This dramatic change made mortgages significantly more expensive. Redfin reports that new listings are increasing, and the decline in older listings is slowing down. In five of the 50 largest U.S. metro areas, including Portland, Oregon, and Houston, prices are decreasing. Redfin predicts this trend will spread to more cities in 2024, even as mortgage rates continue to decline slightly. Overall, the company expects approximately 4.3 million homes to be sold in 2024, a 5% increase from 2023, with mortgage rates dipping to 6.6% by the end of the year.