The steady decline in U.S. interest rates helped the housing sector recover from its malaise in early 2019, and the momentum is continuing so far in 2020.
Yes but: Prospective homeowners are finding it increasingly difficult to find a home, as the lower rates have brought on increased selling prices and fewer available homes.
Driving the news: National housing inventory fell by nearly 14% in January — the steepest year-over-year decline in more than four years, according to a survey released this morning from Realtor.com.
- The supply of homes for sale in the U.S. is now at its lowest level since Realtor.com started tracking the data in 2012.
- The company also notes that there is a supply shortage at every price tier, but especially in entry-level homes. The number of properties priced under $200,000 fell by 19% year over year.
What's happening: As mortgage rates decline, applications are spiking and so are prices.
- The 30-year fixed rate for a mortgage fell to an average of 3.71% this week, its lowest level since October, the Mortgage Bankers Association reported Wednesday.
- The refinance rate jumped by 15% to the highest level since June 2013, MBA said. Compared with a year earlier, it was up 183%.
- Conversely, MBA's purchase index fell by 10% because of the challenge buyers had finding homes they could afford.
- National home prices increased 4% year over year in December and are forecast to increase by 5.2% from December 2019 to December 2020, according to the latest report from CoreLogic released Tuesday.
What they're saying: “With fewer homes coming up for sale, we’ve hit another new low of for sale-listings in January,” Realtor.com chief economist Danielle Hale said.
- “This is a challenging sign for the large numbers of millennial and Gen Z buyers coming into the housing market.”
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