In December, sales of previously owned homes jumped by 5.1%. They even got to an extraordinary rate of 4.35 million units. This is the fourth straight month of increases in the resale home sector. It’s a promising sign of recovery for the under-siege sector. Analysts credit this increase to a mix of declining mortgage rates and a slow but steady uptick in buyer applications.
Resales of existing homes were up across December and up for an ever-so-slightly optimistic four-month trend. Mortgage applications have ticked back up slightly. This upward trend is a sign that would-be purchasers are becoming more confident in their ability to obtain financing. After rising significantly in 2022 and early 2023, 30-year mortgage rates have recently relaxed and currently average around 6%. This move comes on the heels of the Trump administration’s announcement that they plan to purchase government-sponsored enterprise (GSE) mortgage-backed securities.
Market analysts suggest that the current political and economic environment is conducive to a near-term continuation of this trend. Homebuyers could be tempted by the recent dip in mortgage rates, which could spark even more pent-up demand to enter the housing market. Despite all of these encouraging indicators, predictions indicate that home sales will be without much pizzazz in the next year at best.
Although resales have been on an upward trend over the past few months, most analysts remain wary of what lies ahead. They point out that any meaningful drop in mortgage rates can’t be expected in the short run. That means a subdued market for home sales, even as December’s surprisingly strong performance offers a ray of optimism that the market might be re-bounding.
Despite these signs, the overall climate of the housing market is still complicated. For this reason, economic fundamentals and the state of buyer sentiment will be the key determining factors in what happens with existing home sales. With hawkish buyers still dominating the market, buyers must continue to keep a watchful eye on interest rates. These are major factors that drive their purchasing decisions.