February 25, 2024
Mortgage

Mortgage Rates Spark Home Tours, Yet Sales Play Hard To Get



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With mortgage rates dipping below 7%, more buyers are touring homes, but that isn’t translating into more sales.

Redfin’s Homebuyer Demand Index, which measures requests for tours and other services from Redfin agents, was 6% higher than the week ending Jan. 28, according to a Redfin report.

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Many buyers who have been sitting on the sidelines are touring homes again because they’re worried prices will increase more if they wait. Sale prices were up 5.5% year over year during the four weeks ending Jan. 28 — the biggest increase in more than a year.

While tours are up, it hasn’t translated into home sales. Mortgage applications declined from a week earlier, and pending sales posted the biggest year-over-year drop in four months.

The increase in tours is expected to convert to pending sales over the next few months as spring approaches.

“I thought declining mortgage rates and more inventory would cause the market to take off right at the start of the new year. But even though demand has picked up some, I’m not wowed,” said Hal Bennett, a Redfin Premier agent in the Seattle area. “Now I believe this year’s market will launch in the spring, once 6% rates are even more entrenched in buyers’ psyches and more homeowners list their houses.

Based on this week’s economic news, it doesn’t appear that mortgage rates will drop significantly in the next few months. On Jan. 31, the Federal Reserve indicated it is unlikely to cut interest rates in March, which will probably keep mortgage rates close to where they are into the spring. Redfin economists expect them to gradually decline by the end of the year.

The daily average 30-year fixed-rate mortgage was 6.75% on Jan. 31, down from 6.95% a week ago but up from 6.17% a year ago, according to Mortgage News Daily. The weekly average 20-year fixed-rate mortgage was 6.69% for the week ending Jan. 25, up from 6.6% a week earlier and up from 6.13% a year ago, according to Freddie Mac.

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