Mortgage rates dropped to the lowest point since September, increasing mortgage demand, according to CNBC.
The numbers: Rates have declined to September 2022 levels, with the average interest rate now standing at 6.23% for 30-year fixed-rate mortgages.
- This is down from 6.42% the previous week and a 7.20% October high—but still significantly above the 3.64% from this time last year.
The demand: Once mortgage rates dropped, demand for mortgages increased, with application volume rocketing up almost 28% last week. Still, mortgage demand remains well behind its levels from a year ago at this time.
- Last January, in the midst of significantly lower rates, mortgage applications were 35% higher than they are now.
The market: Even with falling mortgage rates and an increase in mortgage demand, the number of new listings on the market is still low compared with the year before.
- New listings have fallen 22% year-over-year, and while there are more active listings than a year ago—up 21% from last year at this time—the disconnect primarily speaks to longer sale periods.
- With rates higher and demand lower than a year ago, homes listed for sale are spending more time on the market.
Looking ahead: Housing starts dropped 1.4% in December from November’s rate, according to the Census Bureau. That’s a 21.8 percent drop from December of 2021.
- Meanwhile, building permits for future construction decreased by 1.6% from November to December, and have declined by 29.9% since December 2021.
However, homebuilder confidence in the market rose in January, according to the National Association of Home Builders, thanks in part to the decline in interest rates.