Home Tours Hit Highest Level Since May, Mortgage Demand Surges 68% After Fed Rate Cut
Following the Federal Reserve’s interest rate cut, the housing market shows renewed interest.
According to a Redfin report, homebuyer activity has spiked, with mortgage-rate locks soaring 68% compared to last month. The surge came just five days after the Fed’s historic decision to lower rates for the first time in years.
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Redfin’s Homebuyer Demand Index, which tracks tours and other buying services, notched its highest point since May on September 22. The index posted a 1% year-over-year increase, marking the first gain in nearly a year.
According to the report, mortgage purchase applications climbed over 10% month-over-month, signaling broader home-buying interest. While pending U.S. home sales fell 3.1% during the four weeks ending September 22, it marks the smallest decline in over a month.
Andrew Vallejo, a Redfin agent in Austin, Texas, said he sees the renewed enthusiasm firsthand. “One new client decided to start their home search last Thursday because of the Fed’s rate cuts on Wednesday,” Vallejo said. “They immediately reached out to a real estate agent and they’re working with a lender. Rate cuts have sparked more showings; we’re seeing all our listings in the area get more traffic.”
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Improved affordability appears to be a key driver of the resurgence. The median monthly housing payment dropped 4.4% year-over-year, the biggest decline in four years. The reduction brings payments to their lowest since January, barring the previous four-week period.
Mortgage rates have fallen to their lowest point since February of last year, at 6.18%, despite home prices continuing to rise nationwide at 3.9% annually.
Refinancing activity has exploded, with applications growing 20% in a week, according to the Mortgage Bankers Association. Year-over-year, refinance demand has skyrocketed 175%.
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Joel Kan, vice president and deputy chief economist at the MBA, noted the psychological impact of rates dipping below 6% for FHA loans. “As a result of lower rates, week-over-week gains for both conventional and government refinance applications increased sharply,” Kan said.
The market is also seeing a flood of new listings, up 7.6% year-over-year, the largest increase since June of this year.
While the trends paint an optimistic picture, some caution is warranted.
The jump in mortgage rate locks may be somewhat inflated by buyers who had already decided to purchase but were waiting for the Fed’s move before locking in their rate.
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This article Home Tours Hit Highest Level Since May, Mortgage Demand Surges 68% After Fed Rate Cut originally appeared on Benzinga.com
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