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The Week Ahead: Two Keys Shaping the Spring Homebuying Season

With a U.S. housing inventory short on supply and high on demand, potential homebuyers nationwide await two key factors that will play into their decision-making on whether to jump into the waters or sit on the sidelines.

Freddie Mac’s latest Primary Mortgage Market Survey (PMMS), set for release Thursday, will give more clarity on if rates will remain at a level where those planning to refi their homes are all in, or will be shut out. Last week, rates hit the 3.18% mark, up a slight 0.01% over the week before. The refinance share of mortgage activity decreased to 60.6% of total applications nationwide last week, down slightly from 60.9% the previous week.

“Although mortgage rates remain low, we are beginning to see a pullback by those looking to enter the housing market,” said Sam Khater, Freddie Mac’s Chief Economist. “In fact, homebuyer demand has gone from 25% above pre-COVID levels at the start of the year, when mortgage rates hit record lows, to 8% above pre-COVID levels today.”

While rates remain at all-time lows, the lack of available homes remains a predicament for many, mostly first-time homebuyers and those looking for starter homes. Those available for sale are netting record profits, as Redfin recently found that as the median home-sale price increased 16% year-over-year to a new high of $331,590, 39% of homes sold above their list price, also an all-time high.

Wednesday’s application volume survey from the Mortgage Bankers Association (MBA) will shine a bit more light on where the market stands with all of these factors coming into play.

"Many prospective homebuyers this spring are feeling the effects of higher rates and rapidly accelerating home prices,” said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. “Record-low inventory is pushing home-price growth at double the rate from a year ago, and even above the 10 percent growth rates seen in 2005. The housing market is in desperate need of more inventory to cool price growth and preserve affordability. Higher mortgage rates continue to shut down refinance activity, as the pool of borrowers who can benefit from a refinance further shrinks."

Here's what else is happening in The Week Ahead:

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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