Now Could Be the Best Time to Buy a Home in Months as Affordability Improves
webadmin • November 20, 2023
Now Could Be the Best Time to Buy a Home in Months as Affordability Improves
Seasonal home price cuts and a big improvement in mortgage rates over the last few weeks are contributing to a welcome improvement in homebuying conditions.
The surge in mortgage rates, limited inventory, and expensive home prices this year have resulted in a reservoir of pent-up demand from anxious and ready homebuyers. But with rates dropping over 0.5% in the last few weeks and more sellers lowering prices, that demand is slowly being released into the market. According to data from the Mortgage Bankers Association applications to purchase or refinance a home were up by 2.8% last week - the highest in five weeks.
The housing market is clearly showing signs of turning around. Let's dive into some of the big changes we've seen over the last few weeks and what they mean for your home purchase.
At the same time, active listings are at their highest level since the beginning of 2023, and months of supply ticked up 0.2 points to 3.6 months. Inventory remains constrained nationally, with 4 to 5 months typically signifying healthy supply. But it is rising, which appears to be leading to price reductions. The share of listed homes with a price drop increased to 6.8%, a new record high.
The surge in mortgage rates, limited inventory, and expensive home prices this year have resulted in a reservoir of pent-up demand from anxious and ready homebuyers. But with rates dropping over 0.5% in the last few weeks and more sellers lowering prices, that demand is slowly being released into the market. According to data from the Mortgage Bankers Association applications to purchase or refinance a home were up by 2.8% last week - the highest in five weeks.
The housing market is clearly showing signs of turning around. Let's dive into some of the big changes we've seen over the last few weeks and what they mean for your home purchase.
Inventory Increases Uncommon This Time of Year
Redfin recently reported that some “glimmers of hope” are emerging for prospective home buyers. The first one being that new listings increased 1.5% from a year ago during the four weeks ending November 5th. This was just the second increase since July 2022, which underlines the continued short supply in the housing market. Redfin noted that this increase is partly because new listings were falling during this period last year.At the same time, active listings are at their highest level since the beginning of 2023, and months of supply ticked up 0.2 points to 3.6 months. Inventory remains constrained nationally, with 4 to 5 months typically signifying healthy supply. But it is rising, which appears to be leading to price reductions. The share of listed homes with a price drop increased to 6.8%, a new record high.
More People Are Applying for Mortgages
Mortgage-purchase applications rose 3% from a week earlier during the week ending November 10, bringing them to their highest level in five weeks. That marks the second straight week of increases. And while pending home sales were down 8% year over year during the four weeks ending November 12%, that’s one of the smallest declines since April 2022.House hunters are coming off the sidelines because mortgage rates are dropping from their peak: Average rates have declined from a two-decade high of 8% to the 7.4% range in the last month.
Mortgage Rates are Improving with Inflation
Inflation has been one of the biggest stories of the past two years. Prices have been high, and the inflation rate peaked in June 2022 at 9.1% year-over-year, leaving many families with less purchasing power despite having the same income.However, the Bureau of Labor Statistics announced last week that the inflation rate for October 2023 was 3.2%. Mortgage rates calmed in response to the data showing that the economy is finally cooling off. This includes October's jobs report, which showed that job growth slowed quite a bit last month.
The 10-year Treasury yield, which mortgage rates closely track, also fell following the CPI data release and is now at its lowest level in almost two months.
Cooler economic data is good news for mortgage rates, because it means the economy is normalizing. Over the past couple of years, sky-high inflation has helped push up mortgage rates, and as inflation decelerates, mortgage rates should come down further.
Lower Rates Will Bring Sellers off the Sidelines
New listings of homes for sale are up 3% from a year earlier, the biggest increase in two years and just the second increase since July 2022 (the first was last week). The total number of homes for sale is near its highest level since the start of the year.
There’s a variety of reasons why more homeowners are putting their homes on the market: Some are noticing the small uptick in homebuyer demand, some are worried home prices are going to decline if they wait any longer, and others are ready to give up their low mortgage rate after realizing rates are unlikely to drop back to pandemic-era levels anytime soon.
If you are not ready to make a move just yet, here are 3 steps you can take now to prepare for when the time is right:
1. Schedule a meeting with a mortgage advisor (even if you are not ready to buy!) It’s always best to do this sooner rather than later. No credit check or application needed – we will just discuss your options and put a plan in place so you can move quickly when the time is right.
2. Choose a loan program. Every mortgage program has unique benefits and different requirements to qualify. If you learn about these now and choose the one that makes sense for you, you will have a solid roadmap for what you need to do to prepare for your purchase.
3. Start improving your finances. Once we’ve decided on the best mortgage strategy, the rest of the time will be spent here. Get your down payment in order, make sure you have all your income and asset documentation, pay off any debt you need to improve your credit score, and start planning for your new housing payment.
Preparation is key in this market! Starting the process early will make sure you are able to submit an offer on a home right away and lock in a lower rate when the time is right.
If you would like to know exactly what you need to do to prepare for a home purchase, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all your questions and create a detailed loan comparison and action plan so you can be ready to submit an offer and move quickly when the time is right.
The Bottom Line
We are still optimistic that 2024 will continue to bring lower mortgage rates and provide some relief for homebuyers. This won’t be an immediate drop to 5% mortgage rates. We will likely see some ups and downs in the months ahead, but the recent economic reports are clear indicators that the trend has reversed from higher and higher mortgage rates to lower rates ahead.If you are not ready to make a move just yet, here are 3 steps you can take now to prepare for when the time is right:
1. Schedule a meeting with a mortgage advisor (even if you are not ready to buy!) It’s always best to do this sooner rather than later. No credit check or application needed – we will just discuss your options and put a plan in place so you can move quickly when the time is right.
2. Choose a loan program. Every mortgage program has unique benefits and different requirements to qualify. If you learn about these now and choose the one that makes sense for you, you will have a solid roadmap for what you need to do to prepare for your purchase.
3. Start improving your finances. Once we’ve decided on the best mortgage strategy, the rest of the time will be spent here. Get your down payment in order, make sure you have all your income and asset documentation, pay off any debt you need to improve your credit score, and start planning for your new housing payment.
Preparation is key in this market! Starting the process early will make sure you are able to submit an offer on a home right away and lock in a lower rate when the time is right.
If you would like to know exactly what you need to do to prepare for a home purchase, fill out the form below to schedule a consultation with one of our mortgage advisors. They will answer all your questions and create a detailed loan comparison and action plan so you can be ready to submit an offer and move quickly when the time is right.
Here at Luminate Home Loans, we’re always looking for ways to offer more value to our clients and partners. That’s why we’re thrilled to announce that we’re now a wholly owned subsidiary of Luminate Bank®—and soon, we’ll officially transition under the Luminate Bank® name.
For years, homebuyers have been hoping for a return to the ultra-low mortgage rates seen during the pandemic. But as we move through 2025, it’s becoming increasingly clear that today’s rates—hovering between 6% and 8%—aren’t going anywhere.
Luminate Bank® Welcomes Josh Eifert as Chief Financial Officer, Honoring Legacy of Dave Turk [Minneapolis, Minn.] – [2/4/2025] – Luminate Bank® is proud to announce the appointment of Josh Eifert as its new Chief Financial Officer, succeeding Dave Turk, who has played a pivotal role in shaping the company's strong financial foundation. Josh brings a wealth of experience and strategic vision to Luminate Bank, with 26 years in the banking industry. Most recently, Josh served as CFO at Tradition Capital Bank in Edina, Minnesota, where he led the financial strategy during its remarkable growth from $300 million to more than $2.5 billion in total assets. Before his tenure as CFO, Josh contributed to Tradition Capital Bank in other key financial roles. He began his career with Norwest and Wells Fargo Banks, gaining extensive expertise in financial and operational capacities. Luminate Bank's leadership transition reflects the company's thoughtful succession planning, ensuring its financial strategies remain robust and forward focused. Under the leadership of Dave Turk, Luminate Bank has built an exceptional financial infrastructure, delivering consistent results and creating a foundation that positions the company for continued success. Luminate Bank's CEO, Marc Campbell, shared his confidence in the appointment: "Josh not only brings exceptional financial acumen and strategic insight to Luminate Bank, but he also embodies the principles that define our organization: integrity, innovation, and a steadfast commitment to excellence," Luminate Bank's CEO, Marc Campbell, shared with confidence. "His leadership will ensure our financial strategies succeed and inspire confidence across all who depend on us." "I am honored to join Luminate Bank at such an exciting time. The company's remarkable history of financial excellence and its forward-thinking approach align perfectly with my values and vision," stated Josh Eifert. "I look forward to collaborating with the talented leadership team to build on this strong foundation and drive continued success for our customers, employees, and stakeholders." Josh graduated from the University of Minnesota with a degree in finance and completed the Graduate School of Banking at Colorado. CEO Marc Campbell expressed gratitude for retiring CFO Dave Turk's contributions, saying, "Dave has been instrumental in positioning Luminate as a financial leader. His dedication, insight, and stewardship will always be a part of our company's legacy." Josh Eifert will officially assume his role on February 18, 2025. About Luminate Bank® At Luminate Bank, We Open Doors—empowering individuals and families to achieve their financial dreams through personalized service and innovative digital solutions. As a nationwide bank headquartered in Minneapolis, Minnesota, we are committed to helping our clients meet their financial goals with a blend of modern technology, traditional values, and the trusted guidance of experienced professionals. Known for our exceptional commitment to customers, we take pride in delivering a seamless, supportive experience for every step of the journey. Our dedicated mortgage division has branches and a team of loan originators across the US, making expert home financing solutions accessible to communities nationwide. Luminate Bank is committed to safeguarding your money and accounts with FDIC insurance coverage up to applicable limits. Learn more about how we can open doors for you at www.luminate.bank , follow us on Instagram, LinkedIn, and Facebook, or call (952) 939-7200. For media inquiries, please contact: Debbie Schwake, CMO debbie.schwake@luminate.bank
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