(NewsNation) — Potential home buyers who shied away from purchasing a new residence in 2023 when mortgage rates reached a 23-year high are back on the market and are more likely to buy, recent real estate data shows.
Real estate showings jumped nearly 10% the final week of January compared to the first week of 2024, according to a Wall Street Journal analysis.
Sam Khater, Freddie Mac’s chief economist, said in a news release mortgage rates have stabilized for nearly two months after October’s record 7.79% average rate. He said that as inflation continues to decelerate, rates are expected to drop further.
The current average rate was at 6.63%, Freddie Mac reported last week, still higher than it was this time last year at 6.09%.
“Although affordability continues to impact home ownership, the combination of a solid economy, strong demographics and lower mortgage rates are setting the stage for a more robust housing market,” Khater said in the release.
Home sales dropped by 19% in 2023 from the previous year to $4.09 million, the lowest since 1995, per the National Association of Realtors.
As of Jan. 19, mortgage purchase applications jumped continuing an upward trend in home purchases, according to the Mortgage Bankers Association.
The jump in applications comes as potential buyers with a $3,000 monthly budget gained almost $40,000 in purchasing power, Redfin reported.
Despite the lower rates, however, many real estate experts predict that home ownership will remain out of reach for many. That specifically applies to first-time buyers.
“(Given) that approximately two-thirds of outstanding mortgages currently boast rates below 4%, a notable portion of existing homeowners may opt to postpone their buying and selling plans and wait for the potential for even lower rates before making decisions about their next residences,” Jiayi Xu, an economist at Realtor.com, told Forbes.com.