The Mortgage Bankers Association shows mortgage application activity increased by 7% week-over-week with purchase applications increasing by 3%. Joel Kan, the MBA’s Vice President and Deputy Chief Economist, said “Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market. Many have been waiting for affordability challenges to subside.”
New home sales also showed a bit of a resurgence spurred in part by decreases in home prices.
The Census Bureau’s December new home sales report showed a third-straight month of increased new home sales with a 2.3% month-over-month increase. The report also showed the median price for a new home dropped from $471,200 in November to $442,100 in December. Continued cooling of home prices, as mentioned by Kan, will only further help mortgage activity pick up in the coming months.
The other half of the equation is interest rates, which were also in buyers’ favor this past week.
Mortgage rates continued to trend down week-over-week, according to Freddie Mac’s latest 30-year fixed-rate mortgage average survey. Rates came in at 6.13%, just slightly lower than the week before. Freddie Mac economists noted that any downward trend in rates will support pent-up demand, saying in their report, “Potential homebuyers remain sensitive to changes in mortgage rates, but ample demand remains, fueled by first-time homebuyers.”
Keep in mind that the average you see from Freddie Mac is just that, an average.
Interest rates are calculated based on a number of factors including your credit history, outstanding debt, type of loan you are applying for etc. That’s why it’s always best to discuss your options with a Movement Mortgage loan officer before you start shopping for a home so you can be fully prepared.