Real estate markets across the United States have begun responding to lowering interest rates. In the first week of August, the average rate on a 30-year fixed rate mortgage dropped to 6.73%. This significant decrease in interest rates has sparked a surge in mortgage applications, with the Mortgage Bankers Association reporting a 6.9% increase in mortgage applications and a 16% rise in refinance applications over that same period.
„The drop has occurred largely as a result of encouraging signs that inflation is easing and that the Federal Reserve will be cutting the federal funds target rate sooner rather than later,“ says Charlie Dougherty, director and senior economist at Wells Fargo. With the rate of inflation hitting a three-year low, Federal Reserve chairman Jerome Powell is expected to announce the first of a long-awaited series of rate cuts sometime in September.
While the lowering of interest rates may seem like a boon for potential homebuyers, it may not immediately translate into lower housing prices. Lowered interest rates could stimulate additional competition for limited housing inventory. Churchill Mortgage estimates that every 1% drop in interest rates correlates to roughly five million more households qualifying for homeownership.
Here in Huntsville, the real estate market is looking lively. The Huntsville Area Association of Realtors (HAAR) has released its report for the first week of August, showing positive trends in the market. New listings were up by 15.8% for single-family homes and a staggering 130.8% for townhouse units. Pending sales also saw an increase, with single-family homes up by 8.7% and townhouses up by 380%.
Housing inventory in the Huntsville area market continued to rise, with single-family homes seeing a 38.8% increase and townhouse units experiencing a 144% increase. These numbers indicate a healthy and active real estate market in Huntsville, with plenty of options for potential buyers.
As a reminder, the new rules for realtor commissions announced by the National Association of Realtors in March will be coming into effect on the 17th. These new rules are designed to ensure transparency in the process of realtor commissions. For more information, visit the National Association of Realtors website, www.nar.realtor/the-facts.
The Huntsville Business Journal will continue to report developments in the real estate industry, both nationally and here at home. Stay tuned for more updates on how the changing interest rates and market conditions are impacting the real estate landscape across the United States.