Mortgage News February 12, 2023
As of the end of January, the number of homes for sale continued to decline. The data is a result of a combination of fewer new listings and more buyers. Prices, which were falling in the fourth quarter, have stabilized due to low supply.
Is the housing market already at its bottom? Will a recession or higher interest rates ensue or is this a temporary blip?
This week’s single-family home inventory dropped again to 466,000. While unusual for late January, it’s not entirely unheard of. During pre-pandemic years, inventory would fluctuate up and down during the first week of January and reach its lowest point for the year during the first week of February. For the spring buying season, it would then rise.
There is a 71% increase in inventory since the peak of 2022. Until the week of March 5, 2022, inventory continued to decline. There is a 37% decrease in inventory compared to January 2020, just before COVID-19 broke out. Basically, inventory is low, and it hasn’t started climbing yet, so we should see at least one more week of decline.
A 6% increase in pending sales week over week indicates an improvement in demand. A pending home sale is one that is under contract but has not yet been closed. Demand is picking up after an ice-cold fourth quarter, but there are 30% fewer contracts underway than last year.
There is still a significant slowdown in sales compared to last year when rates were still at 3.5% and buyers knew that this was their last chance to purchase a home. It seems they are picking up each week rather than trending downward.
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