A potential buyer with a monthly payment budget of $3,000 can now purchase a home for about $453,000 at the current average 30-year fixed mortgage rate
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Redfin chief economist Darryl Fairweather said in a news release that mortgage rates are unlikely to change meaningfully as the market develops, echoing what colleagues at Freddie Mac said last week in a major mortgage market survey. Echoes.
That means buyers won’t gain anything if they try to time the market, as they did during the “golden window” of record-low interest rates in 2021, she said.
“Instead, buyers should consider their own personal and financial circumstances: most importantly whether the home meets your long-term needs and whether you can afford it,” Fairweather said.
At current rates, the monthly payment for a typical American home selling for about $363,000 is $2,545. But the monthly payment increased by nearly $200 to $2,713, and the rate in the last week of October was 7.8%.
These calculations are based on a loan-to-value ratio of 80%, a property tax rate of 1.25%, and a home insurance contribution rate of 0.5%.
Consumers are re-entering the market; taking the Mortgage Bankers Association Weekly Application Index as a guide,
If anything, buyers are pursuing it more aggressively as falling home prices have yet to have an impact on the lack of inventory for sale. Sen. Elizabeth Warren, D-Mass., highlighted the issue during her conference call.for
“I’ve seen a couple of homes recently that had over 15 offers, and one had over 30 offers,” said Shoshana Godwin, an agent with Redfin Premier in Seattle. “We wait and see and hope interest rates come down. Right now, buyers are snapping up homes. Because even though interest rates haven’t dropped significantly, people are realizing that the longer they wait to buy a home, the more competition they’re likely to face.”
The latest information provided by First American Data & Analytics shows that the “real house price” indicator, which adjusts values over time and across the United States, based on the impact of changes in income and interest rates on consumers’ ability to purchase homes, increased 11% year-over-year in November.
“since [November 2022]”Home prices have resumed their upward trend as demand for housing continues to outpace supply,” Mark Fleming, chief economist at First American, said in a news release. “Despite affordability challenges due to rising mortgage rates, Data for November 2023 shows that house prices have reached new highs for the tenth consecutive month.”
Household incomes need to rise to cope with falling affordability, a measure of interest rates and house prices.
“While household incomes have increased by 3.4% since November 2022 and improved consumer affordability, this has not been enough to offset affordability losses from rising interest rates and higher nominal prices,” Fleming said.
U.S. median home sales price accelerates