Data issued by Redfin Corp RDFN Thursday revealed its Homebuyer Demand Index — which tracks various services tied to early-stage home buying — was up 10%, while mortgage applications came in 14% higher than at the end of October.
Those would-be homeowners who have been sidelined this year due to historically high mortgage rates are turning the corner, not waiting any longer to shop around for a home as mortgage rates come down from previous highs.
What Happened: Redfin’s Homebuyer Demand Index, which tracks home-tour requests among other services, climbed 10% as mortgage rates came in at 6.31% this week, down from a peak of 7.08% during the last week of October.
For the first-time home-buyer, that drop-off in rates will save roughly $200 on a mortgage payment.
“Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s chief economist.
Why It Matters: Home buying demand and purchase applications are still down sharply from a year ago when mortgage (and Fed fund) rates were low.
And a further indication that the housing market is still not quite back on fire, pending home sales are down more than 30% year-over-year, and homes are selling at their slowest pace in nearly two years. But, Redfin noted slowing inflation and hopes that the Fed will ease rate hikes into 2023 will likely bring mortgage rates down further, improving homebuying demand.
Read Also: Here's Where Morgan Stanley Bets The Housing Market Goes In 2023
“Don’t call it a comeback or even a recovery yet; demand is still way down from its peak,” said Taylor Marr, Redfin’s deputy chief economist. “We’re keeping a close eye on the labor market for confirmation that inflation will continue slowing.”
Homebuilder Steps In: Stuart Miller, executive chairman of Lennar Corp LEN explained the company was reducing the cost of new home sales and homes in backlog to promote deliveries in the current inflated environment.
Lennar’s new home deliveries climbed 13% year-over-year, but new orders decreased 15% to 13,200 homes.
"Our sales volume and pricing have clearly been impacted by rising interest rates, but there remains a significant national shortage of housing, especially workforce housing, and there is still demand as we navigate the rebalance between price and interest rates," Miller said.
Photo: Anna Pecherskaia via Shutterstock
© 2023 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.