A sudden turnaround in economic indicators
“Mortgage rates have been trending lower for a third consecutive week as new data indicates inflationary pressures are easing. The combination of a continuing strong economy, declining inflation and lower mortgage rates should encourage more homebuyers into the market.” Freddie Mac (FHLMC)
Stock and bond markets, which have a major influence on household wealth, consumer confidence, and interest rates, were generally characterized by deep pessimism in October, but financial markets suddenly shifted to rapturous optimism in November as major changes in economic indicators such as inflation and the Federal Reserve continued to pause hikes of its benchmark interest rate led to a dramatic decline in mortgage rates and an increase in mortgage applications in recent weeks.
Since the homebuying process typically takes 30-60 days from loan qualification to application to closing, sales could potentially pick up in December — or, more likely, in early 2024, since the mid-winter holiday period is typically the lowest year for new listing (and sales) activity (provided these favorable trends continue).
In January 2023, a similar decline in interest rates in the second half of 2022 saw a strong rebound in buyer demand.
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