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Daily Mortgage Rates Back Off Recent Highs

Amid a recent trend of declining mortgage rates, demand has shown early indications of increasing according to Redfin’s [1] most recent Homebuyer Demand Index [2]. 

It found that the daily rate dipped to 6.29% by Dec. 1, down a full percentage point from its peak of 7.29% a month earlier. Mortgage-purchase applications are up 4% from a week ago, and Redfin’s Homebuyer Demand Index is up about 1.5% from a month ago. 

As price drops become less common as mortgage rates fluctuate downward, just over 6% of homes for sale each week in the last month had a price drop, down from 7.2% a week earlier. 

“There have been a handful of pieces of relatively good news for the housing market lately, but we’re far from out of the woods. Key indicators of homebuying demand will likely be teetering on a knife’s edge with every data release that comes out related to the Fed’s path to eventually bringing rates down,” said Taylor Marr, Redfin’s Deputy Chief Economist. “We’re likely past peak inflation, past peak mortgage rates and past the bottom for mortgage purchase applications. But there’s further cooling ahead for the housing market, as sales and prices have further to fall before buyers and sellers become comfortable with homebuying costs again.” 

The availability of inventory on a months of supply basis hit 4.1 months by the end of November, the highest level recorded since May 2020. The supply of homes for sale posted its biggest year-over-year increase on record even as new listings declined by double digits, indicating homes lingered on the market over Thanksgiving week. 

Among the top-50 largest metropolitan areas, home-sale prices declined in 10 of them. Prices fell 8.2% year over year in San Francisco, 2.8% in San Jose, CA, 2.7% in Pittsburgh, 2.3% in Detroit, 1.7% in Sacramento and 1.3% in Austin. They declined less than 1% in Chicago, San Diego, Los Angeles and Philadelphia. 

Other leading indicators of homebuying activity as highlighted by Redfin include: