Spring home buying season shows 'steady demand' as mortgage rates slip for second week
The average 30-year fixed mortgage rate dropped to 6.42% as of March 23, down from 6.6% a week prior
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The spring home buying season is showing "steady demand" as mortgage rates slip for a second week in a row.
On Wednesday, the Federal Reserve raised its key interest rate by a quarter-percentage point and signaled that it could soon pause the increases amid the worst banking crisis since 2008.
Despite the Fed's announcement this week, Redfin says its overall housing-market outlook for this spring hasn't wavered.
"Mortgage rates are likely to temporarily decline but not plummet, and demand is likely to swing up and down based on fluctuations in rates and availability of homes on the market," the real estate brokerage reported.
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Over the past week, in particular, demand increased as the average 30-year fixed mortgage rate slipped to 6.42% as of March 23, down from 6.6% a week prior, according to mortgage buyer Freddie Mac. As a result, the typical U.S. homebuyer’s monthly housing payment was pulled down from its peak two weeks ago, according to Redfin.
"Mortgage rates are likely to temporarily decline but not plummet, and demand is likely to swing up and down based on fluctuations in rates and availability of homes on the market," Redfin reported. (Lance McMillan/Toronto Star via Getty Images / Getty Images)
Redfin also noted that mortgage-purchase applications are up 17% from a month ago and the number of homebuyers contacting Redfin agents for tours also rose this week.
The issue, though, is that there is still a tight supply of homes given that "sellers are typically slower to return than buyers," according to the brokerage.
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New listings during the four weeks ending March 19 fell 22% compared to a year earlier, marking "one of the biggest declines since the housing market nearly ground to a halt in the beginning of the pandemic."
On top of that, Redfin projected that competition could increase further as we get deeper into spring as long as rates stay closer to 6% than 7%.
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Overall, though, the market is in a better place compared to a few weeks ago, according to Redfin Chief Economist Daryl Fairweather.
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"The banking-industry chaos of the last few weeks likely prevented the Fed from making a big, inflation-fighting hike this week that could have sent mortgage rates soaring," Fairweather said. "They kept the hike small partly because banking turmoil naturally combats inflation."