Housing Market Mends – Signs of Growth from Falling Mortgage Rates
In wake of signs showing a robust labor market, new information has been released depicting slowing, but promising, signs of growth in the housing market. In November, the 30-year home loan rate reached a 20-year record, peaking above a full 7%. Now, as confidence grows in the Fed’s pause of interest rate hikes, mortgage rates have begun to fall, lowering to 6.09%, more than a full percentage point from November’s highs. Although this number is twice as high as just a year ago, it shows small yet significant signs of improvement; the refined numbers and promising economic growth to have seemed to also bring more demand into the housing market.
Real estate broker Redfin reports that the number of people beginning the home-buying process with an agent has increased far beyond November’s lows. Furthermore, after six months of declines, signed real-estate contracts finally grew in December of last year. This year, mortgage applications have risen by a quarter to start the new year off. Other positive reports come from D.R. Horton, the U.S.’s largest home builder by volume. The housing giant claims that in the first weeks of January, they experienced heightened volumes of sales activity that are purported to increase into the second quarter. As it seems the housing sector may begin to pick up the slack it has had in dragging down the economy, it is still important to note exactly how the Fed’s next steps can continue to affect the sector. Investors should continue to monitor the job market, as record-low unemployment levels may force the Fed to reposition itself in a more hawkish stance, leaving mortgage rates to potentially climb back to their more recent highs.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
