Mortgage Rates Up For First Time In Seven Weeks While Luxury Home Sales Hit Record Low

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On the Mortgage Front

Freddie Mac (OTCMKTS:FMCC) reported the 30-year fixed-rate mortgage averaged 6.42% as of Dec. 29, up from last week when it averaged 6.27%; this marked the first uptick in mortgage rates in seven weeks. The 15-year fixed-rate mortgage averaged 5.68%, down from last week when it averaged 5.69%.

“The housing market remains in the doldrums with declining sales, inventory and prices,” said Sam Khater, Freddie Mac’s chief economist. “The declines in sales and deceleration in home prices began swiftly earlier in 2022 but have moderated more recently. While the intensity of weakness is moderating, the market continues to decline and forward leading indicators suggest housing will remain weak throughout the winter.”

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On the Homebuying Front

Pending home sales were down the sixth straight month in November, according to the National Association of Realtors (NAR). The trade group’s Pending Home Sales Index fell 4.0% to 73.9 from the previous month, while the year-over-year pending transaction activity fell by 37.8%. An index of 100 is equal to the level of contract activity in 2001.

“Pending home sales recorded the second-lowest monthly reading in 20 years as interest rates, which climbed at one of the fastest paces on record this year, drastically cut into the number of contract signings to buy a home,” said NAR Chief Economist Lawrence Yun. “Falling home sales and construction have hurt broader economic activity.”

However, Yun predicted more vibrant days ahead, noting that there are “approximately two months of lag time between mortgage rates and home sales. With mortgage rates falling throughout December, home-buying activity should inevitably rebound in the coming months and help economic growth.”

On the higher-end side of the housing market, Redfin (NASDAQ:RDFN) reported sales of luxury homes fell 38.1% year-over-year during the three months ending Nov. 30, the biggest decline in the 10 years this data was being tracked. In comparison, non-luxury home sales were down 31.4% in the same period.

The number of luxury U.S. homes for sale rose 5.2% year over year to roughly 163,000 during the three months ending Nov. 30, the largest increase since 2016. By comparison, the supply of non-luxury homes declined 5.7% to about 552,000. However, new listings of luxury homes fell 2.9% year-over-year during the three months ending Nov. 30, compared to the 19.8% decline in non-luxury home listings.

The biggest year-over-year declines in luxury home sales were in New York’s Nassau County (-65.6%) and four California metros: San Diego (-60.4%), San Jose (-58.7%), Riverside (-55.6%) and Anaheim (-55.5%).

As for those seeking affordable homeownership opportunities, Rocket Mortgage, part of Rocket Companies (NYSE:RKT), introduced Purchase Plus, a special purpose credit program designed to expand homeownership access in underserved communities.

According to the Detroit-based company, the new program offers up to $7,500 in credits for first-time homebuyers to use toward their mortgage costs. Purchase Plus is now available in specific census tracts across six major cities where potential homebuyers could benefit the most – Atlanta, Baltimore, Chicago, Detroit, Memphis and Philadelphia – but the company did not state if it would be rolled out nationwide in 2023.

“Homeownership has a significant impact on strong communities and the creation of generational wealth,” said Bob Walters, CEO of Rocket Mortgage. “Our Purchase Plus program is a catalyst that will help narrow the homeownership gap by addressing a concern we’ve heard time and again – the difficulty of saving for out-of-pocket expenses when buying a home.”