From a total inventory perspective, we haven’t seen any pickup in demand in the past couple of weeks as mortgage rates fell under 7%. This is a bit surprising to me. I expected to be able to measure some pickup in demand with cheaper money. Two factors are at play here.
1) It could be that rates haven’t fallen far enough or stayed there long enough. I expected that under 6.75 to 6.5 would be a threshold for buyers to start moving. We hit 6.5 10 days ago. But rates didn’t stay there long and climbed all last week. As a home buyer, I’d have to be attuned to rates and purchase options to jump that quickly. Most buyers are frankly not that aware. Rising rates can stop me quickly, but it takes longer for lower rates to motivate me to take action.
2) The other reason we haven’t measured any pickup in demand with lower rates is seasonal timing. For falling rates to motivate buyers to take action, we’d need buyers actively shopping. We could be witnessing homebuyers totally checked out for 2024, waiting to see where rates are, what the economy is doing, and who is president next spring. If I were a homebuyer, I wouldn’t see many market trends that would make me want to jump now.
Whatever the reasons, we are not yet measuring any increase in demand for this dismal 2024 housing market.
Is the rate drop enough to move the needle?
August 12, 2024, 4:57 pm By Mike Simonsen