Mortgage rates have dropped yet again—could this spell an opportunity for homebuyers?

The average interest rate for a 30-year fixed-rate home loan fell to 6.09% for the week ending Feb. 2, according to Freddie Mac. That’s down nearly a full percentage point from October’s 20-year high of 7.08%.

Meanwhile, the number of homes for sale is soaring, flying 71% higher for the week ending Jan. 28 compared with this same week a year earlier, according to a recent analysis by®.

This dip in mortgage rates, combined with plenty of homes on the market, adds up to a potential win for homebuyers.

“The less competitive market may have created chances for first-time homebuyers who are looking to become homeowners in 2023,” says® Chief Economist Danielle Hale in her analysis.

We’ll break down what the latest real estate statistics mean, and how homebuyers can use them to their advantage, in this latest installment of “How’s the Housing Market This Week?”

Inventory is booming and homes are lingering

Not only are there more homes on the market, but buyers can take their sweet time checking them out. In January, homes typically sat on the market for 75 days. And for the week ending Jan. 28, listings lingered 17 days longer compared with that same week a year earlier. That’s 27 weeks straight of time on the market increasing.

“This slower market pace is a welcome relief to shoppers, particularly first-time homebuyers who need more time to think through their buying options,” says Hale.

But what homebuyers don’t have is fresh listings, which were down for the week ending Jan. 28, by 9% from a year ago. The number of new properties hitting the market has been on the decline for 13 consecutive weeks now.

“As mortgage rates remain high, homeowners looking to sell and buy at the same time—who are likely to have a good rate on their current mortgage—may be pausing their moving plans to see if the market improves before putting their home up for sale,” explains Hale.

Home prices are normalizing

In January, home prices clocked in at a median of $400,000, down from June’s peak of $449,000. Yet home prices for the week ending Jan. 28 are still up by 7.7% compared with this same week a year earlier.

So even though prices are still growing annually, they’re tapering off from the double-digit growth that characterized much of 2022.

“The overall price growth in January continued its downward trend as we move into 2023, suggesting that the normalization continues in price growth,” notes Hale.

The affordability factor still looms

Despite the trifecta of positive news in the housing market—more homes for sale, lower mortgage rates, and stabilizing prices—the affordability challenge remains a persistent issue for many prospective homebuyers.

Plus, Hale predicts, “The Fed’s determination to fight inflation may keep mortgage rates remaining at high levels in the short term.”

But she also notes that rates could fall in the second half of the year, so home shoppers who aren’t able to afford a home now can take heart that 2023 looks bright overall.

“For buyers looking at a housing market with a rising number of home inventories and retreating prices, there is hope that 2023 will offer more opportunities,” says Hale.

Source: By Margaret Heidenry