Why many homeowners are ‘staying put’<\/h2>\n\nLast week, the average interest rate for certain 30-year fixed-rate mortgages decreased to 7.37%<\/a> from 7.41% the prior week, in the fourth successive week of declines. Lower mortgage rates have prompted mortgage applications to pick up.<\/p>\nYet, about 80% of outstanding U.S. mortgages have interest rates below 5%, according to Bank of America’s research. Even the recent decline in mortgage rates may not provide incentive for homeowners to move.<\/p>\n<\/div>\n
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“The story for 2023 has been one of homeowners staying put,” said Daryl Fairweather, chief economist at Redfin.<\/p>\n
Factors that have contributed to that immobility have recently started to ease, though it remains to be seen whether that will last.<\/p>\n
The median monthly mortgage payment is down more than $150 from the peak, marking the lowest level in three months, Redfin’s Nov. 30 research found. Monthly payments are falling as mortgage rates come down from their peak.<\/p>\n
The weekly average 30-year mortgage rate fell to 7.29% in late November, down from a 7.79% high in October, according to Redfin.<\/p>\n
Those declining rates have offset rising home prices, with the median sale price up 4%. The number of new listings, which is up 6%, has had the biggest year-over-year increase since 2021, according to Redfin.<\/p>\n<\/div>\n
More prospective buyers willing to take a risk<\/h2>\n\nMore prospective homebuyers may be willing to take a chance to reach their goal, with 62% indicating they are waiting for prices and\/or rates to fall before buying a home, down from 85% who said the same six months ago, according to Bank of America.<\/p>\n
Major life events tend to prompt people to move, according to Skylar Olsen, chief economist at Zillow.<\/p>\n
“The problem is, right now, the finances block people from following that major fundamental change,” Olsen said.<\/p>\n<\/div>\n
\nFor example, they may choose to struggle through a long commute to a new job while they wait for lower home prices, she said.<\/p>\n
That may be poised to start to shift in 2024, but it will likely be very gradual, Olsen said.<\/p>\n
Zillow’s forecast has called for mortgage rates improving very slowly, which means the number of new listings may also improve very gradually, she said.<\/p>\n
Prospective buyers who are hoping for a big drop in home prices will be disappointed, Olsen said.<\/p>\n
Rather than a dramatic decline, there will likely be slower home price growth over the next five years, she said, barring any big changes to current dynamics.<\/p>\n
Last week, the average interest rate for certain 30-year fixed-rate mortgages decreased to 7.37%<\/a> from 7.41% the prior week, in the fourth successive week of declines. Lower mortgage rates have prompted mortgage applications to pick up.<\/p>\n Yet, about 80% of outstanding U.S. mortgages have interest rates below 5%, according to Bank of America’s research. Even the recent decline in mortgage rates may not provide incentive for homeowners to move.<\/p>\n<\/div>\n “The story for 2023 has been one of homeowners staying put,” said Daryl Fairweather, chief economist at Redfin.<\/p>\n Factors that have contributed to that immobility have recently started to ease, though it remains to be seen whether that will last.<\/p>\n The median monthly mortgage payment is down more than $150 from the peak, marking the lowest level in three months, Redfin’s Nov. 30 research found. Monthly payments are falling as mortgage rates come down from their peak.<\/p>\n The weekly average 30-year mortgage rate fell to 7.29% in late November, down from a 7.79% high in October, according to Redfin.<\/p>\n Those declining rates have offset rising home prices, with the median sale price up 4%. The number of new listings, which is up 6%, has had the biggest year-over-year increase since 2021, according to Redfin.<\/p>\n<\/div>\n More prospective homebuyers may be willing to take a chance to reach their goal, with 62% indicating they are waiting for prices and\/or rates to fall before buying a home, down from 85% who said the same six months ago, according to Bank of America.<\/p>\n Major life events tend to prompt people to move, according to Skylar Olsen, chief economist at Zillow.<\/p>\n “The problem is, right now, the finances block people from following that major fundamental change,” Olsen said.<\/p>\n<\/div>\n For example, they may choose to struggle through a long commute to a new job while they wait for lower home prices, she said.<\/p>\n That may be poised to start to shift in 2024, but it will likely be very gradual, Olsen said.<\/p>\n Zillow’s forecast has called for mortgage rates improving very slowly, which means the number of new listings may also improve very gradually, she said.<\/p>\n Prospective buyers who are hoping for a big drop in home prices will be disappointed, Olsen said.<\/p>\n Rather than a dramatic decline, there will likely be slower home price growth over the next five years, she said, barring any big changes to current dynamics.<\/p>\nMore prospective buyers willing to take a risk<\/h2>\n