Declining mortgage rates could pave the way for more homebuyers in 2024.
Daily average mortgage rates fell to 6.64% this week, the lowest level since May 2023, and down from a two-decade high of 8.03% in late October, Redfin reported.
Overall, the average rate for a 30-year fixed mortgage fell to 6.66% on Thursday, while the average rate on a 15-year contract hit 6.06%, data from Mortgage News Daily shows.
Easing mortgage rates should help lure home sellers off the sidelines and entice homebuyers back to the market, according to Redfin.
“This week’s falling mortgage rates, sizable year-over-year increases in both new listings and listing consults with Redfin agents, and surge in housing starts all suggest that 2023’s frozen housing market is thawing,” said Redfin in a news release.
Redfin said the third week in December brought a “double-digit annual increase” in homeowners contacting agents about selling their homes. Additionally, with new listings up 9% from a year ago — the biggest annual increase since July 2021 — would-be homebuyers will have more inventory to select from.
Redfin noted that the 9% increase was partly due to falling rates, with homeowners feeling “less locked in by rates in the 3% to 4% range.”
“The last week of economic news and data makes it more likely than not that mortgage rates have peaked,” said Redfin economic research lead Chen Zhao, per the news release.
“Buyers will return from the holidays with more homes to choose from, and they should still see rates in the mid-6% range. But because the Fed is erring on the side of caution, there’s still a chance that rates could go back up,” she added.
As of December 21, mortgage-purchase applications were up 18% from their early November low point, while pending home sales were down 7% on the year.
Although mortgage rates are down and early-stage demand has increased, it has not yet translated into homebuying contracts, according to Redfin. The company noted that “the holidays are typically a slow season for the housing market.”