The housing market continues to present challenges for homebuyers as affordability issues persist, compounded by economic uncertainties. Orphe Divounguy, a senior economist at Zillow, highlighted the significant affordability challenge buyers still face despite recent shifts in the market. Closing costs for a $300,000 mortgage can range from $6,000 to $18,000, adding to the burden of the down payment. Meanwhile, the average 30-year fixed rate mortgage saw a slight decrease to 6.87% for the week ending February 13, according to Freddie Mac data.
Experts anticipate a decline in January's home sales data despite an increase in new home listings. January saw the highest number of new home listings since July 2022, with 564,642 new entries marking a 1.9% rise from the previous month and a 4.7% increase from a year earlier. Chen Zhao, an economist at Redfin, attributes this surge partly to actions from the White House.
"A lot of it is coming from the White House," – Chen Zhao, an economist at Redfin.
Despite these positive numbers in listings, mortgage applications fell by 6.6% for the week ending February 14, as reported by the Mortgage Banker's Association. This decline suggests potential buyers are hesitant, possibly due to broader economic uncertainties.
The median sale price for homes in the four weeks ending February 16 was $375,475, reflecting a 3.7% increase from the same period last year. The average buyer's agent commission dropped to 2.37% in the fourth quarter of 2024, compared to 2.45% a year earlier, indicating a shift in market dynamics.
Mortgage rates have shown some volatility; after reaching a peak of 7.04% in January, they have now decreased to 6.87%, making it the lowest rate recorded this year. This fluctuation poses another layer of complexity for potential buyers evaluating their options.
Closing costs remain a critical consideration for buyers, typically ranging between 2% and 6% of the loan amount according to NerdWallet. These additional expenses can significantly impact the overall affordability of purchasing a home.
The economic landscape continues to play a pivotal role in buyer behavior. Chen Zhao notes that uncertainty surrounding the broader economy is causing some potential buyers to reconsider their plans, which could further affect sales figures moving forward.