
With little major economic data released this week, mortgage markets remained relatively stable as investors looked ahead to the upcoming Federal Reserve meeting. As a result, mortgage rates ended the week nearly unchanged.
Existing Home Sales Show Modest Growth
In December, sales of existing homes increased slightly from November, reaching their highest level since February and rising 9 percent from a year ago. The median existing home price climbed to $404,400, reflecting a 6 percent increase compared to the same time last year. Inventory remains constrained at a 3.3 month supply nationwide, significantly below the six month supply typically seen in a balanced market. However, inventory levels were 16 percent higher than a year ago, offering some relief. For buyers, rising inventory could provide slightly more choices, though competition remains strong due to historically low supply. Sellers continue to benefit from steady demand and rising home prices, but they should remain aware of affordability concerns that could limit buyer activity.
Housing Starts Surge but Growth is Uneven
The latest home building data showed an unexpected increase, with overall housing starts in December jumping 16 percent from the previous month, reaching their highest level since February 2024. However, the gains were almost entirely driven by a 58 percent surge in multi family construction, while single family starts rose just 3 percent. Single family building permits, a key indicator of future construction, increased only slightly. A separate survey measuring home builder sentiment from the National Association of Home Builders came in close to expectations. For buyers, the increase in multi family construction could eventually ease rental market pressures, but limited single family home construction means the shortage of available homes for sale is unlikely to improve significantly in the near term. Sellers can expect demand to remain steady, though new construction trends should be monitored closely.
Mortgage Applications Reflect Shifting Market Conditions
The latest report from the Mortgage Bankers Association brought mixed news. Applications for mortgage refinances fell 3 percent from the previous week but were an impressive 42 percent higher than one year ago. Purchase applications rose by 1 percent from the prior week and were slightly higher than this time last year.For real estate, an increase in purchase applications suggests that buyers are adjusting to current market conditions and moving forward with home purchases. Sellers may see more interest from buyers, particularly if mortgage rates stabilize at favorable levels.
What This Means for Real Estate
The latest data points to a gradually improving market. For buyers, increasing inventory and stable mortgage rates could create more favorable conditions, though competition for available homes remains strong. Sellers can benefit from steady demand and rising home prices but should remain mindful of affordability constraints that may impact buyer activity.
Understanding these market trends will help you make informed real estate decisions. Whether buying or selling, staying ahead of economic shifts can help you navigate the market with confidence.
Contact us today to discuss how these factors could influence your next move in the housing market.
