More Prospective Home Buyers Touring Properties as Mortgage Applications Rise: Report
Homes that were on the market for several weeks are ‘finally selling,’ a real estate expert said.
An uptick in interest has been noted among prospective home buyers even as mortgage rates continue to remain elevated, according to real estate brokerage Redfin.
This is the highest level since December last year.
Mortgage-purchase applications also rose by 17 percent month over month to hit the highest level since late January. The figure for pending home sales, a measure of sales contracts signed but transactions yet to be closed, is up by 6.5 percent.
Following the U.S. presidential election, there has been a “burst in early-stage homebuying activity, like home tours,” a trend that continues, Redfin said.
The real estate brokerage said people were “waiting for the election to pass before getting serious about buying a home.” Buyer acceptance of current mortgage rates was another reason for the bump in activity, Redfin said.
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Many buyers “have grown accustomed to elevated mortgage rates, and many have accepted they’re unlikely to come down anytime soon. The current weekly average rate is 6.81 percent, roughly the middle of the 6 percent to 7.8 percent range seen over the last two years,” Redfin said.
He said that this high responsiveness of buyers to even the smallest change in rates is proof that “affordability headwinds persist.”
Mimi Trieu, a Redfin Premier agent in the Bay Area, said there is a “lot of pent-up demand” in the housing market given the slow summer and early fall seasons.
In addition to realizing that rates may not come down significantly anytime soon, buyers are “also noticing there are not many desirable, move-in ready homes for sale that are priced reasonably,” Trieu said.
Slow Housing Market
According to a report from real estate listings marketplace Realtor, total active listings in the housing market in November hit a level “not seen since before the COVID-19 pandemic.”
Despite the strength in supplies, “high rates in November had led to the slowest market since January of this year and the slowest November in five years,” according to the report.
The demand for house tours has increased, and homes that have been sitting on the market since the summer are now selling, Redfin said. Studio Romantic/Shutterstock
Rising mortgage rates have blunted seller optimism, with properties remaining unsold for longer. In November, a typical home was listed on the market for sale for 62 days, 11 more days than during the same month last year, it noted.
Around half of the U.S. population lives in areas that rank in the top 10 percent in terms of population density. These regions now account for a smaller share of single-family construction at 36 percent, down from 40 percent in 2018.
“Regulations and NIMBY policies create significant headwinds for builders to construct affordable housing in urban centers, which has created this shift in residential construction to low density areas,” NAHB Chief Economist Robert Dietz said in a Dec. 3 statement.
NIMBY, or “Not in My Backyard,” is a term referring to local opposition to development initiatives such as housing projects.
“Policymakers at all levels of government need to eliminate excessive regulations, ease permitting roadblocks and promote careers in the skilled trades to allow builders to construct more homes and apartments across the nation,” Dietz said.
