Housing Market Begins to Warm

Mortgage applications are up, a sign the housing market may be thawing, according to The Wall Street Journal (subscription).

What’s going on: “The average 30-year home loan rate has come down by just about a full percentage point from a 20-year high above 7% in November, largely in response to signs that the Federal Reserve is nearly finished lifting rates. That has brought some new buyers into the market.”

Mortgage applications increased by approximately a quarter since the end of 2022, and the number of people contacting real-estate agents about looking at homes for purchase has risen since a November low.

Why it’s important: The housing market is seen as a proxy for overall economic health.

While the Federal Reserve has indicated that it will keep interest rates high until inflation comes down, some economists say the worst of the housing downturn is over.

What’s expected: Net housing sales are likely to increase from Q1 to Q2 of this year, according to homebuilder D.R. Horton Inc. Spring tends to bring more buyers and sellers, they said.

And “[r]eal-estate agents say buyers have adjusted to the reality that higher mortgage rates will eat up more of their monthly housing costs.”
Affordably priced homes, however, are expected to remain in relatively scarce supply this year.