Will Lower Mortgage Rates Escalate Sales Gains?
The real estate industry will soon see what kind of impact weeks of declining mortgage rates have had on home sales. Will it provide the boost some experts are predicting?
Since early November, the 30-year fixed-rate mortgage has fallen nearly half a percentage point, from 4.94 percent to 4.45 percent, where it stood at the end of this week. This could provide an important incentive for potential home buyers to make a move. The 30-year rate, which didn’t budge in the latest week of reporting, was on a downward trend for six consecutive weeks prior. Existing-home sales in November were already bouncing back from unusually low volume in the summer months, gaining 1.9 percent month over month, due largely to stability in the overall economy, according to data from the National Association of REALTORS®. But when NAR’s data for December existing-home sales is released Tuesday, it may reveal whether lower mortgage rates have escalated sales gains.
NAR Chief Economist Lawrence Yun told Yahoo! Finance on Thursday that he expects recent declines in mortgage rates to keep home sales on an upward track—possibly leading to an additional 200,000 transactions this year. “Buyers will want to take advantage of the lower rates,” Yun says. “This additional demand will help absorb inventory. Both home prices and home sales will be lifted.”