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The mortgage rates have reportedly decreased which has made the prices for home purchases more affordable. Real estate agents also confirm that mortgage applications for home purchases have increased.
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Houses For Sale [Photo: Insurify]
The decrease in mortgage rates is an advantage to homebuyers. In December 2022, the average list price of home purchases have also decreased by 11.1%. This means that the average price of a home has decreased from $449,000 in June to $400,000. A survey conducted by the Mortgage Bankers Association (MBA) two weeks ago also revealed that the number of mortgage applications for home purchases has increased by 25%. This increase has been the first since December 2021, as reported by Bahney.
According to Cruz-Martinez, President Jeffrey Ruben of WSFS Mortgage also stated that homebuyers who have been previously approved but did not make any purchases have joined the housing market again. Apart from the decreasing rates in mortgage, the homebuyers also want to avail the seller incentives to further decrease the prices of home purchases.
In December 2022, data from the National Association of Homebuilders revealed that at least 35% of the homebuilders decreased the prices of housing. Another 62% continued to make use of incentives to bring in buyers. These incentives included paying points and rate buy-downs. During the last three months of 2022, around 42% of the homes sold included seller incentives like cash for closing costs or repairs.
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Challenges Despite Decrease in Mortgage
However, Cruz-Martinez also said it is still a challenge to bring repeat homebuyers back into the housing market. These repeat homebuyers may not be inclined to sell their current homes and relinquish the very low rates they have also received during the COVID-19 pandemic. According to John Downs, the senior vice president of Vellum Mortgage, some homeowners may also not want to climb the property chain due to their current payments that are very low.
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