US housing market shows to recover as pending homes sales grew by 3% and mortgage rates reached 6.17%

Posted on January 30, 2023   |  

In January, builder sentiment in single-family housing registered a gain for the first time in 12 straight months.

Sentiment rose 4 points to 35 on the National Association of Home Builders/Wells Fargo Housing Market Index and stood at 83; Anything below 50 is still considered negative sentiment.

Current sales conditions rose 4 points to 40, sales expectations in the next 6 months increased 2 points to 37, and buyer traffic rose 3 points to 23.

The average contract interest rate on the 30-year fixed mortgage last peaked at 7.37% at the end of October, but in December, it fell and reached 6.17%, which affected builders and consumers.

In December, pending home sales grew by 3% which is the first month-over-month increase since October 2021 as demand is stirring back to life, including bidding wars, more requests for home tours, and a growing number of people contacting the brokerage firm to start the home buying process. 

In 2022, policymakers already lifted the standard federal funds rate 7 consecutive times and plan to continue raising rates higher this year to crush inflation. 

Demand has shown early signs of returning as mortgage rates continue to drop from a record high of 7.08% in November and this week, the average rate for a 30-year fixed mortgage fell to 6.15% but compared to a year ago the rates remain significantly higher.