Lower mortgage rates are awakening buyers as the new year brings a more hopeful home buying climate, yet the wintry weather felt across the country has kept buyers and sellers indoors.
While mortgage purchase applications were up 8% from a month ago, the expectation of increased housing activity has been high as new listings increased 8% year over year during the four weeks ending Jan. 14, according to Redfin. However, as interest rates float in the mid-6% range—down from 8% in October 2023—there has been a more glacial than expected start to the post-holiday housing market.
“We expected both buyers and sellers to react more strongly to last month’s drop in mortgage rates once the holidays passed, but frigid weather and snowstorms have halted a lot of buying and selling plans,” says Redfin economic research lead Chen Zhao. “As long as rates don’t shoot up, we expect the market to pick up as the spring season approaches.”
With rates lower, the typical U.S. home buyer’s monthly housing payment is $2,456 with last week’s average rate. While that’s up 10% year over year, it’s down from October’s record high of over $2,700. The less worrisome finance conditions present a better opportunity for buyers as (hopefully) the country thaws and activity begins to warm up.
“People who were casually house hunting when rates were higher are getting serious now,” says Chicago Redfin Premier agent Dan Close. “Buyers are feeling more confident that they can get good value for their money, and many first-timers are jumping in because Chicago rents are still rising. Homeowners who were waiting for the holidays to be over and rates to come down before selling are getting ready to list. I have several listings prepped to hit the market, some as early as this week and some throughout the rest of the first quarter.”
Looking at the 50 most populous U.S. metros, within the four weeks ending Jan. 14, Chicago saw the largest year-over-year decrease in listings at -13.6%. Chicago was followed by Atlanta at -10.2%; Newark, New Jersey, at -7.3%; Providence, Rhode Island, at -7.1%, and Portland, Oregon, at -5.6%, according to Redfin data.
