Austin KlarVanguard Properties · Lawyer Turned Real Estate Agent

Homebuyer Demand Up As Mortgage Rates Fall Four Consecutive Weeks

Name: Homebuyer Demand Up As Mortgage Rates Fall Four Consecutive Weeks
Uploaded: 2023-12-06T02:00:06+00:00
Duration: 55 s
Channel: Austin Klar
Description: In this market commentary, Austin Klar explains that investors are pricing in a series of Federal Reserve rate cuts for next year, which historically…

6 Dec 2023 · 1 min

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In this market commentary, Austin Klar explains that investors are pricing in a series of Federal Reserve rate cuts for next year, which historically leads to lower mortgage rates and higher home prices. He notes that mortgage rates have dropped from an average above 8% to just over 7% over the past four weeks, a decline that aligns with a rise in purchase applications. Klar argues that lower rates boost homebuyer demand, suggesting that 2024 will see more transactions and sustained elevated home prices if rates continue to fall. He invites viewers to follow him for ongoing interest‑rate updates.

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Investors are now pricing in a series of Fed rate cuts next year, which if history tells us anything, is going to lead to lower mortgage rates and further elevate home prices. We all know interest rates have an outsized impact on home affordability compared to price reductions. So when interest rates go down, expect for demand to go back up. The last 4 weeks have shown exactly that, and there are other instances of this throughout history, even earlier this year. Over the last several weeks, interest rates have fallen from on average over 8% to now just over 7%. Still high, but a big decrease for that short of a span. And as you can see in the top graph, exactly coinciding with a decrease in mortgage rates was an increase in purchase applications. Buyers are out there clearly biding their time, paying attention to the market, waiting for interest rates to fall to jump back in. Whether that's the right strategy depends on your priorities, and we could talk about that all day, but the reality is demand is going to go back up if interest rates keep falling. This means there are likely to be more transactions in 2024 than in 2023, and home prices are likely to remain elevated as rates fall. Follow me for more interest rate updates.