CNBC Reports Mortgage rates fell for the 4th consecutive week

The average long-term mortgage rate fell for the fourth consecutive week and have dropped more than three-quarters of a point since hitting a 20-year high last month.

Mortgage buyer Freddie Mac reported Thursday that the average on the benchmark 30-year rate dipped to 6.33% from 6.49% last week. A year ago the average rate was 3.1%.

The average long-term rate sat at 7.08% in early November, but has since had the steepest 4-week decline since 2008.

“While the decline in rates has been large, homebuyer sentiment remains low with no major positive reaction in purchase demand to these lower rates,” said Sam Khater, Freddie Mac’s chief economist.

Mortgage rates are still more than double what they were a year ago, mirroring a sharp rise in the yield on the 10-year Treasury note. The yield is influenced by a variety of factors, including global demand for US Treasurys and investor expectations for future inflation, which heighten the prospect of rising interest rates overall.

Mortgage rates fall for fourth straight week ahead of Fed meeting© Provided by New York Post

The average long-term rate sat at 7.08% in early November, but has since had the steepest 4-week decline since 2008.AP see also

Mortgage rates fall for fourth straight week ahead of Fed meeting© Provided by New York Post

Mortgage rates fall ahead of upcoming inflation report

Here’s why US homes were pulled off market at a record pace last month

The Federal Reserve, which has been hiking its short-term lending rate since March in a bid to crush the highest inflation in decades, raised its rate again early this month by 0.75 percentage points, three times its usual margin, for a fourth time this year. Its key rate now stands in a range of 3.75% to 4%.

Markets rallied last week after Fed Cair Jerome Powell signaled that the Fed may increase its key interest rate by just a half-point at its December meeting next week. Rate increases could then fall to a more traditional quarter-point size at its February and March meetings, based on previous Fed forecasts. Powell said the Fed will likely have to keep rates elevated for longer than originally planned, as inflation has eased somewhat but remains way above the central bank’s 2% target.

The sharp rise in mortgage rates this year, combined with still-climbing home prices, have added hundreds of dollars to monthly home loan payments relative to last year, when the average rate on a 30-year mortgage barely got up above 3% much of the time.

That’s created a significant affordability hurdle for many would-be homebuyers, spurring this year’s housing market downturn. Sales of previously occupied homes fell for the ninth consecutive month in October, hitting the slowest pre-pandemic annual sales pace in more than 10 years.

The rate for a 15-year mortgage, popular with those refinancing their homes, slipped to 5.67% from 5.76% last week. It was 2.38% one year ago.

Should you Sell your Home now or Wait?

Unusual market conditions and dire predictions from some economists have many homeowners asking: should I sell my house now or wait until 2023? 

Typically, homeowners who list their homes in the spring can take advantage of higher buyer demand. In 2022, the National Association of Realtors pinned mid-April as the optimal week to sell a home. But most economists believe that affordability pressure from rising mortgage rates will continue to curb demand, causing prices to fall in many markets in 2023. So if you’re poised to sell, some experts contend that now is a better time than next year.

Let’s dig in a bit more on this question of whether now is a good time to sell a house — and what factors to consider when making your decision.

Why you may want to list your home now

The timing isn’t perfect, but it could get worse

The best time to sell is typically when buyer demand is high and interest rates and inventory are low. That ideal combination of factors made for a hot selling market in 2021, but conditions have since evolved. While mortgage rates decreased in December due to the expectation of slower rate hikes from The Fed, 30-year fixed rates are still hovering around 6.5%. 

High mortgage rates coupled with recession fears are keeping many prospective homebuyers out of the market. Essentially, the best time to sell has already passed, and many believe we’re moving toward worsening conditions for sellers. “It's unlikely that selling conditions will improve in any meaningful way over the course of 2023,” says Dave Meyer, VP of Data and Analytics at BiggerPockets and author of Real Estate by the Numbers.

The Federal Funds Rate is still climbing

“If you have to sell your house, you should do it now,” says Armstead Jones, Strategic Real Estate Advisor for Real Estate Bees. “Mortgage rates aren’t going down and actually may go up. Something important to remember is once you sell your house, you then have to find a house to buy.” The Fed has signaled that rate hikes will continue, even if they won’t be as steep — and mortgage rates tend to follow the federal funds rate. 

The good news is, home values skyrocketed over the course of the pandemic, so selling now is likely a wise financial decision. “Despite prices coming off their June peak, most homeowners stand to make large profits if they sell their home, even in today's market,” says Meyer. 

Most economists believe prices will fall

Rising mortgage rates not only have the effect of making your new mortgage payments less affordable, but also shut many would-be buyers out of the market. Lower demand means less competition for your home, which affects the sale price you can reasonably hope to achieve. If these effects are widespread, when will the housing market crash? 

Economists at Wells Fargo, Capital Economics, Goldman Sachs, and many other firms believe housing prices will start falling in 2023. If a recession takes hold, some experts predict prices could fall as much as 30% in highly overvalued markets. Even those who are more optimistic expect the market to shift to benefit buyers. If you’re considering selling in the next year, housing market predictions indicate that selling now could allow you to capture a higher price. 

Why you may want to wait to sell your home

You’re trading up for a bigger home

“If you're looking to trade up to a bigger home, this is a tough market to do that. Affordability is low, and you'll likely be paying considerably higher monthly mortgage payments on a trade up, even to move to a slightly bigger home,” says Meyer. If the monthly mortgage payments on a bigger house are unaffordable, you may have to stay put a little longer. 

You’re not in any rush to sell

“Two years from now will be a better time to sell. The market and inflation will be resolved,” says Jones. Many economists are expecting home prices to rebound by 2025. Mortgage rates are likely to come down by then as well, making it easier for you to afford your new home. 

Bottom line

For most homeowners, now will be a better time to sell than 2023. That’s especially true if you live in a market that saw rapid appreciation in recent years. Your real estate agent can help you understand pricing trends in your area, along with available inventory and demand. Waiting until spring may not be a bad idea in markets where prices are expected to remain flat or grow. But if you can hunker down and wait until 2025, you may realize even better outcomes.