Source: Realtor.com —
Is the housing market back?
A surge in mortgage interest rates last year ground the real estate market to an abrupt halt, as scores of would-be buyers could no longer afford to purchase homes. But last month, as mortgage rates dipped and home prices fell from their peaks, home shoppers dipped their toes back in.
Real estate agents across the country reported buyers returned to open houses, the number of mortgage applications surged, and the most desirable homes received multiple offers again.
“What we’re seeing are the seeds of a potential spring thaw,” says Realtor.com® Senior Economist George Ratiu. But he warns that it’s too early to tell if the market will rebound this year.
“Just because we’ve had a couple of weeks of positive news doesn’t mean the market is roaring back yet,” he continues. “We’re still in the middle of a winter freeze.”
The market typically picks up after the holidays and then takes off in the spring. But on the precipice of the busy season, rising mortgage rates could drive the market back to a standstill. Large swings in rates often unnerve potential buyers, and increases erase any savings they might have found just a week ago—an extremely frustrating experience for buyers.
Rates had fallen from more than 7% late last year to just below 6% at the beginning of February, according to Mortgage News Daily. But more recently, they climbed yet again—up to 6.43% by Wednesday for 30-year fixed-rate loans. That change adds about $100 a month to the typical mortgage payment—and nearly $35,000 over the life of a 30-year fixed-rate loan. (The calculation assumes the buyer put 20% down on a $400,000 home.)
The true test will begin in March. Those looking for a new home generally begin or pick up their searches during the warmer months, which is prime time for real estate. Prices typically rise as buyers try to outbid one another on the larger homes framed by flowers in bloom that go up for sale.
Until last week, signs were pointing to a rebound. Mortgage applications surged in the week ending Feb. 3, according to the Mortgage Bankers Association. They rose 45.6% from four weeks ago. (However, they’re still down from the highs of a year ago.)
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