We close the door on 2023 last week, a year to which lenders, homeowners, Realtors® and potential buyers will likely bid "good riddance." Although they have declined meaningfully at the tail end of it, average mortgage rates still remain well above their best levels of 2023, not that those levels were all that great. However, the retreat for mortgage rates from about 22-year highs does at least provide some optimism as we move into the new year.
Although you might not think so, at least some typical patterns were seen over the last 12 months. Once the Fed lifted short-term rates to 22-year highs in July, mortgage and other long-term interest rates kicked higher on a "higher for longer" message from the central bank. However, as often seems the case, investors pushed market-based interest rates to a place where, given economic fundamentals, they likely overshot where they should have been; now, at least part of the recent decline in rates is likely from a rush of investors to the other side of the see-saw. This is a regular occurrence in bond markets, and so pretty typical happenstance.
With mortgage rates down a considerable amount, we'll expect to see at least some pick up in existing home sales before long. That said, not just yet, as the number of folks signing contracts to purchase existing homes in November remained at the same low level as was seen in October. The National Association of Realtors Pending Home Sales Index remained at a 71.6 value for a second consecutive month, but that's not surprising, as mortgage rates started November at 22-year highs. Although mortgage rates were lower at the end of the month, the kick off of the holiday season tends to put potential homebuyers on the sidelines. even in years where there are more homes available to buy and at lower prices, too. The flat reading for the PHSI for November suggests little improvement for existing home sales for December and may also exert a little drag on January closings.
It might be hard to find anyone in or around the mortgage and housing business who will lament the passing of 2023 into history, and that of course includes potential homebuyers and sellers. Outside of brief periods of what might pass for normal conditions -- mostly in the time between perhaps 2016 and 2019 -- distortions have been the order of business in the housing market now since the housing crash and Great Recession. As the calendar turns, we can hope that we are at the beginning of a trend back toward normal again, but this may be a bit of a protracted process, much as it was coming out of the last rough patch.
As is typically the case this time of year, financial markets have been mostly quiet, what with holidays and such, and next week is another holiday-shortened affair. However, it's not devoid of important data, as it will bring wide-ranging, first-week-of-the-month reviews of the labor market (JOLTS, initial claims, the employment situation) and ISM coverage of both manufacturing and service-side business conditions. There was little reason to expect any huge change in mortgage rates over the last few days; that said, the first full business week of the new year (and beginning of a new quarter) has often seen a shift in the holiday pattern for interest rates, for better or worse. In the interim, mortgage rates are likely still have a slight downward bias, perhaps enough to produce a decline of a few basis points off the average offered rate for a conforming 30-year FRM as reported by Freddie Mac.
Although you might not think so, at least some typical patterns were seen over the last 12 months. Once the Fed lifted short-term rates to 22-year highs in July, mortgage and other long-term interest rates kicked higher on a "higher for longer" message from the central bank. However, as often seems the case, investors pushed market-based interest rates to a place where, given economic fundamentals, they likely overshot where they should have been; now, at least part of the recent decline in rates is likely from a rush of investors to the other side of the see-saw. This is a regular occurrence in bond markets, and so pretty typical happenstance.
With mortgage rates down a considerable amount, we'll expect to see at least some pick up in existing home sales before long. That said, not just yet, as the number of folks signing contracts to purchase existing homes in November remained at the same low level as was seen in October. The National Association of Realtors Pending Home Sales Index remained at a 71.6 value for a second consecutive month, but that's not surprising, as mortgage rates started November at 22-year highs. Although mortgage rates were lower at the end of the month, the kick off of the holiday season tends to put potential homebuyers on the sidelines. even in years where there are more homes available to buy and at lower prices, too. The flat reading for the PHSI for November suggests little improvement for existing home sales for December and may also exert a little drag on January closings.
It might be hard to find anyone in or around the mortgage and housing business who will lament the passing of 2023 into history, and that of course includes potential homebuyers and sellers. Outside of brief periods of what might pass for normal conditions -- mostly in the time between perhaps 2016 and 2019 -- distortions have been the order of business in the housing market now since the housing crash and Great Recession. As the calendar turns, we can hope that we are at the beginning of a trend back toward normal again, but this may be a bit of a protracted process, much as it was coming out of the last rough patch.
As is typically the case this time of year, financial markets have been mostly quiet, what with holidays and such, and next week is another holiday-shortened affair. However, it's not devoid of important data, as it will bring wide-ranging, first-week-of-the-month reviews of the labor market (JOLTS, initial claims, the employment situation) and ISM coverage of both manufacturing and service-side business conditions. There was little reason to expect any huge change in mortgage rates over the last few days; that said, the first full business week of the new year (and beginning of a new quarter) has often seen a shift in the holiday pattern for interest rates, for better or worse. In the interim, mortgage rates are likely still have a slight downward bias, perhaps enough to produce a decline of a few basis points off the average offered rate for a conforming 30-year FRM as reported by Freddie Mac.
