Housing Market Improvements – Mortgage Demand Rises Again
Following a devastating year of higher inflation, mortgage rates, and uncertainty, the American housing market has begun seeing small, but promising, signs of improvement that will hopefully create a trend for 2023. Firstly, mortgage rates have declined for three straight weeks, reaching a current rate of 6.2% for 30-year-fixed-rate mortgages. Although this number was around 3% one year ago, these small improvements did seem to translate into the consumer; mortgage demand has begun increasing, with total application volume increasing by 7% from last week. Furthermore, applications to refinance a home loan saw gains of 15% relative to the previous week.
Slowly but surely, homebuyers seem to be creeping back into the market, but one problem they still currently face is low housing inventory. Currently, there are an estimated 690,000 homes available for sale in the United States, down over 40% from the 1.2 million seen in late 2019. Furthermore, mortgage applications to buy a home are still down 39% year over year but did see a small positive change of 3% for the week. Nevertheless, although there have been improvements as of late, analysts believe most home sellers and buyers are still waiting for lower interest rates and improved economic conditions.
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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.