According to Freddie Mac, rates on 30-year fixed-rate mortgages have slipped from 6.60 per cent in mid-March to 6.32 per cent for the week ending 30 March.
This is a solid reminder that while the Federal Reserve may influence mortgage rates, it does not control them. It's also a small window of opportunity for homebuyers to move quickly and lock in lower rates, which could help make the cost of homeownership more attainable.
But "fast" will be the key word here, as the mortgage market has become more volatile and unpredictable than ever.
"The direction of mortgage rates is likely to be bumpy," notes Danielle Hale, chief economist at Realtor.com®, in her weekly analysis.
All in all, the housing market is shaping up to be a bumpy ride in the spring, which will undoubtedly affect how many homebuyers and sellers can afford the ups and downs.
As Hale explains, "Looking ahead, mortgage rates will play a significant role in the amount of activity we see in the housing market this spring".
In our column "How's the housing market this week?" in its latest edition, we unpack what it all means for homebuyers and sellers trying to decide whether to jump into these choppy waters.
Mortgage rates are just one of the many issues facing homebuyers trying to navigate today's bumpy housing market.
Another issue is that home prices remain stubbornly high. For the week ending March 25, listings were 6.3 per cent higher than they were in the same week last year, and Hale noted that the median asking price hovered at $424,500 in March, which is still "higher than all but the most expensive six months of 2022".
The good news is that home prices are growing at a slow, single-digit rate, and those growth rates will likely continue to shrink, possibly even flipping into negative territory this summer. However, for most homebuyers, this may not be fast enough.
Another issue that homebuyers are grappling with is the severe lack of new homes. In the week ending March 25, 20 per cent fewer new homes came on the market than in the same period last year. Incredibly, the number of new listings is almost on par with the lows touched in April 2020, when much of the world was on lockdown during the first wave of the COVID-19 pandemic.
With fewer new listings for sale and higher prices in recent weeks, buyers are largely unhappy with their prospects. home-buying sentiment dropped in February and many simply dropped out of the market, leaving the few who remained with a dubious advantage.
"The market is less competitive than the previous two years," says Hale, "but in large part because higher home prices and mortgage rates are making it difficult for many people to navigate the high costs."
While there are fewer new listings, there are 57 per cent more homes for sale. However, many of these listings are for older homes. Homes for sale are on the market an average of 18 days longer than they were a year ago.
"What I'm seeing is homes staying on the market longer," said Denise Supplee, a real estate investment educator at SparkRental and a real estate agent in the Philadelphia area." Bidding wars aren't as common. Personally, I think interest rates are scaring purchasers, both novice and savvy buyers. I have one buyer who decided to hold off selling their home to buy another."
As for what she sees as the next step for her market, Supplee says: "I do believe we will see a slowdown in the economy and a favoured sellers' market tilting towards buyers."
In the meantime, there will likely be close attention paid to the Fed and what its moves signal about the economy as a whole.
"Investors will be assessing whether each new piece of data signals the end of the long-awaited monetary tightening - with the Fed admitting it is now closer to the horizon - finally in the rearview mirror," Hale said." Until then, equity-rich homeowners will likely continue to have the edge."
