Throughout 2022, spiking mortgage rates not only weakened housing affordability, but they also led to a significant drop in homebuyer demand, sending mortgage purchase applications down 40% year-over-year in December. For the last several months, however, rates have been inching back down from peak highs, and that slight improvement may motivate buyers to ease their way back into the for-sale market, Fortune reports.
Over the past two months, the average 30-year fixed mortgage rate dropped from 7.37% to 6.09%, leading to a slight uptick in demand, though housing experts say home prices will need to fall by another 6% or 7% to boost affordability and sustain normal levels of demand.
Through October, the Case-Shiller National Home Price Index has U.S. home prices down 2.4% from the June 2022 peak. In 2023, Capital Economics expects U.S. home prices to fall 6% while the average 30-year mortgage rate slips to 5.75% by year end. Peak-to-trough, Capital Economics expects U.S. home prices to fall between 8% to 10%.
Advertisement
Related Stories
Affordability
Survey Shows Buyers Have Homebuying Regrets
More than 80% of respondents have regrets about their home purchase and 50% of upcoming buyers would consider forgoing using an agent
Economics
Mortgage Applications Increase Week-Over-Week, but Rates Remain a Challenge for Buyers
Data from the Mortgage Bankers Association show slight signs of optimism in national housing market
Single-Family Homes
Single-Family Permits Increased by 26% During March
The total number of single-family permits reached 241,311 year-to-date, with the West seeing the greatest rise