Falling Mortgage Rates Cause Buyer Activity to Rebound

After crossing the 7% threshold in November, mortgage rates have retreated during the last several months, falling to 6.5% during the week of Feb. 20, and according to the National Association of Realtors (NAR), that improvement in housing affordability has translated into rebounding sales. NAR’s Pending Home Sales Index rose 8.1% from December 2022 to January, but despite a faster sales pace, contract signings are still down 24.1% on an annual basis.

Though borrowing costs are stabilizing and builders are enticing a growing number of buyers with sales incentives, high home prices could continue to push some house hunters out of the for-sale market throughout 2023.

Meanwhile, home prices likely will remain steady in most parts of the country, with a minor change expected in the national median home price, [Lawrence] Yun suggests. NAR is forecasting the median existing-home price to moderate after rapid gains over the previous two years. The national median home price is expected to be about $380,100 this year, falling 1.6% compared to the previous year. NAR expects home prices to gain traction again next year, jumping 3.1% to $391,800.

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