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Are Bidding Wars Back in Your Town? Housing Market Shows Signs of Recovery
Sarah Hansen is a senior writer at Money covering all things personal finance. Previously, she covered economic policy and capital markets on the breaking news desk at Forbes.
Could the housing market be heating up again? After a sharp uptick in mortgage rates in 2022, both buyers and sellers headed to the sidelines. But new data from the real estate brokerage Redfin provides evidence that a recovery is underway now that mortgage rates are falling.
The average rate on a 30-year fixed rate mortgage is now 6.13%, according to Freddie Mac. That's nearly a full percentage point less than its peak of 7.08% in early November, and many experts expect rates to keep falling in the months to come.
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Those first two numbers are still significantly lower than they were a year ago — down 23% and 27%, respectively. That's an indication that the market is still far below its 2021 peak.
Homebuilding is ticking up: Data released Thursday by the Census Bureau showed that sales of newly built homes (not existing homes) ticked up 2.3% in December.
What’s next, according to experts
"January thus far has shown promise of offering a turning point in the market," Zillow Senior Economist Nicole Bachaud said in email commentary shared with Money. "With builder sentiment up, mortgage rates down, and mortgage applications picking up steam again, we might see the market thaw out before the spring shopping season sets up."
Redfin deputy chief economist Taylor Marr says that even though the thaw is likely to continue over the next months and weeks (helped along by falling inflation and interest rates), "there’s still a long way to go."
In a blog post, he notes that the recovery will vary significantly on the local level — some places could see the return of ultra-competitive bidding wars, while others could see the market continue to stagnate.
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