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What’s Going on in the Housing Market?

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.

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