The housing market sees signs of life as 30-year rates fall
Economy
February 7, 2023
Tired of your annoying roommate? Looking for a heat check on the economy?
Best be paying attention to 30-year mortgage rates and housing data.
Why? The housing market makes up an outsized 15-18% of the US GDP. And a 1% difference in mortgage rates can mean Uber Eats or pick up an extra $137 monthly on a $300K mortgage.
Heat check: Since last November, US 30-year mortgage rates have fallen nearly one percentage point after breaking a 20-year high of 7%.
Far from the 3% seen a year ago, but we’ll take what we can get.
Buyers are easing back into the market — with many expecting that they can refinance later.
- Mortgage applications have risen by nearly a quarter since the end of 2022.
- Real estate brokerage Redfin (NASDAQ:RDFN) said they’re seeing more people contacting real estate agents.
- D.R. Horton (NYSE:DHI) — the largest US homebuilder, reported increased sales activity at the start of 2023.
Where’s the market heading? Some thoughts from Goldman Sachs:
- Housing’s negative impact on the economy has already peaked.
- Prices are to decline 6%, and sales to bottom in the first six months of 2023 — and recover from there.
But don’t expect the housing market to recover to its previous levels. Rates are expected to stay high, and housing supply is still low from sellers holding back.
