Home price appreciation is slowing. Consumer sentiment about the housing market is at a five-year high.
To cap it all off, mortgage rates have been continually falling throughout 2019. Currently, the 30-year fixed-rate mortgage is averaging 3.82%, roughly a two-year low, according to Freddie Mac. So far this year, mortgage rates have only increased on a weekly basis six times.
Historically, that’s been a recipe for a home-buying frenzy, MarketWatch reports.
And yet, consumers haven’t shown much interest in buying homes these days. Last week, mortgage applications for home purchases only rose 10% from the previous week, despite mortgage rates being at a two-year low. And the week before that, mortgage applications for home purchases actually dropped by 2%, according to data from the Mortgage Bankers Association.
So why haven’t home sales rebounded? Housing market experts say there are a few reasons. For one, move-up buyers are facing fewer incentives to move. They risk losing their current interest rates (often lower than current rates), face higher than usual home prices and there’s the fallout from the recent changes to the tax code. Current homeowners are grandfathered into the previous mortgage interest deduction, which is higher than what consumers can get nowadays.
Further keeping home buying rates lower than expected is that those who would otherwise move up, are still in the homes that first-time buyers would be purchasing. Read the full story.