The Housing Market Has Begun to Recover
The US housing market has started to recover after hitting a low point in November 2022. Despite not being completely out of the woods, there are signs of improvement, such as an increase in the number of homebuyers, bidding wars in some markets, and a rise in mortgage applications. The number of Redfin customers requesting home tours has improved 17% from November, and the number of people contacting Redfin agents to start the home buying process has improved 13%. However, home tours and requests for service are still down 23% and 27% respectively compared to a year ago.
Buyers have adjusted to the 6% mortgage rate, which feels like a relief after the rate surpassed 7% in the fall. Some are even getting a rate that starts with a 5, which is considered a psychological threshold. The decline in mortgage rates has increased mortgage applications by 28% and brought the average 30-year-fixed mortgage rate down to 6.15% from 7.08% in November. Pending home sales rose 3% in December from November, marking the first monthly increase in 14 months.
Bidding Wars Return in Select Markets
The trend of bidding wars is back in some markets, including Seattle, central Florida, and Richmond, VA. Homes that are in high demand tend to be affordable, suburban, single-family, and priced competitively. Preliminary data suggests an increase in bidding wars in the Seattle and Tampa markets. However, the trend is selective, and it may take time for bidding wars to become widespread. In some areas, well-priced homes are receiving multiple offers, but competition is still not at 2021 levels.
In Boise, ID, bidding wars are still rare, despite falling prices since November. Homes are taking between 1-2 weeks to receive an offer after a showing, and buyers are making low offers and asking for concessions. They are not as committed to homes as they used to be and are happy to walk away if they do not get exactly what they want.
In conclusion, the housing market has started to recover, with an increase in homebuyers and bidding wars in select markets. Buyers have adjusted to the 6% mortgage rate, and declining rates have increased mortgage applications and home sales. However, the trend is uneven, and it may take time for the market to fully recover.