Prospective homebuyers are finding relief as the average 30-year fixed mortgage rate has dropped to 6.64%, down from its peak at 8% just two months ago. This decrease in mortgage rates is contributing to a revival in the housing market, with new listings and pending home sales reaching their highest levels in about a year. November saw a modest 1.3% month-over-month increase in new listings, while active listings, representing the total supply of homes for sale, grew by 3.9% month over month. Real estate analysts believe that the market is turning a corner, with anecdotal reports from agents indicating increased property visits, submitted offers, and accepted offers.
The housing market had faced challenges earlier, with a seven-month streak of rising home prices and a freeze in homebuying as mortgage rates soared to 8%. In September, existing-home sales plummeted by 15% year-over-year. The recent drop in mortgage rates is bringing fresh life to the housing market, leading to a rise in new and active listings. While some clients are still waiting for further declines in mortgage rates, industry experts expect the trend of declining rates to continue, sparking more activity and interest in the housing market.
Despite signs of improvement, experts caution that it is too early to predict the housing market’s trajectory in 2024. Although pending sales reached their highest level in a year in November, closed sales were down. Notably, about 45,000 home-purchase agreements were canceled in November, representing nearly 17% of homes under contract, the highest percentage in records dating back to 2017. Buyers and sellers are grappling with economic uncertainty, causing some to hesitate, particularly in cities like Atlanta, Jacksonville, Cleveland, Fort Lauderdale, and Las Vegas, where more than 20% of pending home sales fell out of contract. Concerns about rising home prices offsetting the advantages of lower mortgage rates contribute to the cautious approach of both buyers and sellers, adding a layer of complexity to the evolving housing market landscape.