- Homeowners have mostly stayed put in 2023 amid high mortgage rates.
- Yet, those homeowners may be willing to move for the right opportunity, a new survey shows.
- Prospective buyers are more willing to take a chance.
Why many homeowners are ‘staying put’
Last week, the average interest rate for certain 30-year fixed-rate mortgages decreased to 7.37% from 7.41% the prior week, in the fourth successive week of declines. Lower mortgage rates have prompted mortgage applications to pick up.
Yet, about 80% of outstanding U.S. mortgages have interest rates below 5%, according to Bank of America’s research. Even the recent decline in mortgage rates may not provide incentive for homeowners to move.
“The story for 2023 has been one of homeowners staying put,” said Daryl Fairweather, chief economist at Redfin.
Factors that have contributed to that immobility have recently started to ease, though it remains to be seen whether that will last.
The median monthly mortgage payment is down more than $150 from the peak, marking the lowest level in three months, Redfin’s Nov. 30 research found. Monthly payments are falling as mortgage rates come down from their peak.
The weekly average 30-year mortgage rate fell to 7.29% in late November, down from a 7.79% high in October, according to Redfin.
Those declining rates have offset rising home prices, with the median sale price up 4%. The number of new listings, which is up 6%, has had the biggest year-over-year increase since 2021, according to Redfin.
More prospective buyers willing to take a risk
More prospective homebuyers may be willing to take a chance to reach their goal, with 62% indicating they are waiting for prices and/or rates to fall before buying a home, down from 85% who said the same six months ago, according to Bank of America.
Major life events tend to prompt people to move, according to Skylar Olsen, chief economist at Zillow.
“The problem is, right now, the finances block people from following that major fundamental change,” Olsen said.
For example, they may choose to struggle through a long commute to a new job while they wait for lower home prices, she said.
That may be poised to start to shift in 2024, but it will likely be very gradual, Olsen said.
Zillow’s forecast has called for mortgage rates improving very slowly, which means the number of new listings may also improve very gradually, she said.
Prospective buyers who are hoping for a big drop in home prices will be disappointed, Olsen said.
Rather than a dramatic decline, there will likely be slower home price growth over the next five years, she said, barring any big changes to current dynamics.
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