Despite mortgage rates remaining high, more buyers are returning to the real estate market as more markets in the United States are transitioning towards a buyer’s market.
According to the Mortgage Bankers Association (MBA), the average contract interest rate for a 30-year fixed-rate mortgage increased from 6.65% to 6.69% last week, the highest level since August of last year. The average points for a 20% down payment loan decreased from 0.67 points to 0.63 points (including origination fees).
The MBA’s seasonally adjusted index released on Wednesday showed a 6% increase in mortgage applications for home purchases nationwide compared to the previous week, but remained relatively unchanged from the same week a year ago, with a growth rate of 0.2%.
However, due to the rise in mortgage rates, applications for refinancing mortgages, which are sensitive to interest rate changes, decreased by 2% compared to the previous week but were still 7% higher than the same week a year ago. Last year, the average interest rate for a 30-year fixed-rate mortgage was only 15 basis points (0.15%) lower than the current rate.
Nevertheless, despite high mortgage rates, with the increasing inventory of homes for sale in the market, more buyers are returning to the market.
According to a report released by Realtor.com on Tuesday, in the spring of this year, the clearly defined buyer’s market has expanded to 19 out of the 100 largest metropolitan areas in the U.S., creating the most favorable conditions for buyers in nearly seven years. Additionally, another 9 metropolitan areas are currently transitioning towards a buyer’s market.
The 9 metropolitan areas expected to join the buyer’s market before the end of this summer include Atlanta, Georgia; Bakersfield, California; Birmingham, Alabama; Honolulu, Hawaii; Houston, Texas; Memphis, Tennessee; Riverside, California; San Antonio, Texas; and Syracuse, New York.
The report indicates that 70% of the housing market tracked in this regular survey currently favors buyers or is trending in that direction, compared to approximately 50% a year ago.
Senior economist at Realtor.com, Jake Krimmel, noted that this means buyers in some metropolitan areas have greater bargaining power, and sellers are inclined to list their homes at more competitive prices to facilitate quicker transactions.
Reference: This article referenced reporting from CNBC.