Last week’s falling mortgage rates and year-over-year increases in new listings suggest that 2023’s frozen housing market is thawing and Sales are likely to climb after the typical holiday lull. The median U.S. monthly mortgage payment was $2,472 during the four weeks ending December 17, down $264 from the October peak but up 11% year over year. Citing a recent Redfin article, just last week Redfin saw a double-digit annual increase this week in homeowners contacting its real estate agents for help selling their homes. This is certainly a nice prelude to what could be a come back year for mortgage and real estate in 2024. We will certainly celebrate that holiday cheer through new years and be ready for homeownership gains in 2024!

Also, something interesting is unfolding to end 2023 which has to do with the home price collapse that was all for naught. The most recent data available to end the year reports listed homes that had a price cut in order to sell in 2023 was 4% LOWER than the 2022 levels. Yah, LESS HOMES TOOK PRICE CUTS IN 2023 THAN 2022. So what happened with the collapse? Well, sellers just didn’t want to sell, and enjoyed holding on to their historic low interest rates. As we wind down the lowest volume sales year in decades it turns out that economic theory held prevailed, home prices were only destined to dive if mass volumes of listings hitting the market all at once…and that just simply didn’t happen.

And after a year full of record-high interest rates and home prices, experts say there are signs of improvement for the housing market in 2024. In December, the average mortgage rate dropped below 7% for the first time since August and after an 8% peak in October, which pushed housing costs to the highest level since 2000. Jessica Lautz, the deputy chief and vice president of research at the National Association of Realtors says, “The decline poses good news for buyers.” She went on to say that “First-time buyers stand a chance at this time period.” It’s a trade off: Do they want to run the risk of encountering higher competition when rates are lower or do they want to increase the probability of securing homeownership?” Well, what do YOU think about that? Should renters hold out even longer for price declines while rates are also easing up? Or, do you think it will be survival of the fittest and everyone on the fence should jump into the game right now?

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So with that, let’s take a quick look at what’s coming up in the markets this week. You know it’s going to be a light week already, but there’s a few things we’ll have our eyes on as they relate to housing and jobs.

Monday it’s Christmas Day and a bank Holiday, the markets are closed

On Tuesday we get Home Price Index Month over Month and year over year

And Thursday Unemployment claims comes out and Pending Home sales

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The housing market cheered as the Federal Reserve signaled interest rate cuts next year after making a series of rapid rate hikes starting in 2022. While the central bank did not completely rule out the possibility of a rate increase in 2024, that action seems unlikely. Instead, fresh economic projections from central bank officials showed rates would be slashed to a median 4.6% by the end of 2024, suggesting three 25 basis point cuts from current levels. Experts expect the path for monetary policy to support further declines in mortgage rates, just in time for a traditional busy spring housing market. But home buyers who waited on the sidelines for better rates next year may find the waiting game didn’t pay the dividends they expected. The median price of single-family homes in the United states is 425,000 which is 2.4% up from last year at the same time according to Altos research. And if rates continue to ease while demand picks up…home prices will follow suit and climb as well.

So this fed meeting everyone is talking about really was quite positive. With the inflation rate easing and the economy holding in, policymakers on the Federal Open Market committee voted unanimously to keep the benchmark overnight borrowing rate in a targeted range between 5.25% to 5.5%. Committee members penciled in at least three rate cuts in 2024, which is less than what the market had been pricing in, but more aggressive than what officials had previously indicated. The feds dot plot chart indicates another four cuts in 2025 and three more rate reductions in 2026 which could take the feds funds rate down to between 2% to 2.25%. The committee added the qualifier that inflation has eased over the past year while maintaining its description of prices as elevated. Fed officials see core inflation falling over the next two years eventually getting back to their 2% target but not until 2026, that’s right 2026.

And mortgage rates fell below 7% for the first time in four months, bringing some relief to the US housing market that has been plagued with affordability all year. Borrowing costs have eased for seven straight weeks now bringing rates all the way down from their highs of 8% in October down to 6.9% on average. In some cases, VA with high credit scores are still well below THAT! Just last week we were able to lock in a VA loan at 5.875% When’s the last time you saw that number? That’s right it’s been a while but this could also just be a sign of things to come so if you are watching this and you have a FHA or VA loan that is 6.5% percent or higher, drop us a DM or comment below and maybe we can help you save some money with one of your loan program’s streamline refinance options.

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So with that, let’s take a quick look at what’s coming up in the markets this week. It will be a pretty light week leading up to Christmas break for the markets, and given the fact that literally everyone was waiting on last week’s Fed meeting to be the Finale we were all hoping for, this week can really take a chill pill and ease us on home to a simple end of year.

Monday we get the National Association of home builders housing market index

on Tuesday we’ll get building permits and housing starts

on Wednesday we will get the consumer confidence reading as well as existing home sales

Thursday will deliver final GDP quarter over quarter, unemployment claims, and the Philly fed manufacturing index

Friday we’ll finish it off with core PCE, revised consumer sentiment, and new home sales

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Thanks again for tuning in to Monday Mortgage Minute.

Remember to like, subscribe and turn on notifications so you see this show right when it posts each week.

Share this video with someone you care about so they can WIN in mortgage and real estate in 2023.

We’ll see you again next week!