Weekly Real Estate Monitor for April 15-19

by Lukasz Kukwa

This week saw mortgage interest rates continue to rise, starting the week at 7.44%, hitting 7.50% mid-week and back to 7.44% today. While these higher rates may dampen enthusiasm in the spring housing market, simultaneously there was an uptick in mortgage applications that occurred and it appears that prospective buyers are submitting applications as rates have been trending upward in recent weeks as well as the fact that the rate is only part of the equation when it comes to a home purchase, and truly it's a lifestyle decision that drives purchasing a home.

While it's certainly encouraging to observe an improvement, it's crucial to grasp the underlying nature of this movement. Even during periods of consistent rate increases, there are typically intermittent moments of relief, and rarely do rates surge each successive day registering higher rates than the previous.

In essence, it's premature to interpret this improvement as anything more than a temporary rebound, inherent to the broader fluctuations experienced previously. There's also a possibility that rates have risen sufficiently to establish a defensive stance ahead of the upcoming significant data release in early May. Further evaluation over the next two days will provide greater insight into this potential scenario.

For consumers aiming to strike the right balance between securing an ideal rate and navigating home prices, the equation involves not just housing preferences but also affordability considerations. Home prices have surged to record highs for March, with 29% of homes selling above their asking prices. With the spring market reaching its peak intensity in June, it may be wise to take action before bidding wars intensify further amid limited inventory.

Despite Higher Rates, Mortgage Applications Increase

For the second consecutive week, mortgage interest rates have risen, alongside an increase in the volume of mortgage applications, according to the Mortgage Bankers Association (MBA).

Joel Kan, MBA’s Vice President and Deputy Chief Economist, noted, “Rates increased for the second consecutive week, driven by incoming data indicating that the economy remains strong and inflation is proving tougher to bring down. Mortgage rates increased across the board, with the 30-year fixed rate reaching its highest level since December 2023. Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continued to rise. Purchase applications drove most of the increase but remain at low levels, around 10% behind last year’s pace. Refinance applications increased very slightly, driven by a 3% gain in conventional applications.”

Weekly Highlights:

Contracts surpass 2023 levels for the first time.

New contracts for the week ending exceeded those from the same period last year by 10.4%. Additionally, there was a notable 15.4% increase in new pending contracts compared to the previous week.

Elevated levels of canceled listings.

This week marked a significant 19.9% rise compared to the corresponding week last year. Canceled listings refer to listings where the seller and listing broker have terminated the agreement before its expiration date. This surge could indicate some sellers delaying their listings until later in the spring or summer.

Increase in price reductions by sellers.

There was a 7.9% price reduction of active listings which represents a 0.9% uptick from the same week last year. Sellers may be adjusting prices to attract more buyers, especially as mortgage rates have remained elevated recently.

Daily Rate Index

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Lukasz Kukwa

+1(908) 591-0900

lk@makingnjhome.com