While Southern California buyers may have taken advantage of lower mortgage rates at the start of the year, mortgage rates have suddenly risen again, keeping some buyers at bay, according to a recent report from the California Association of Realtors (CAR).
The average interest rate on 30-year mortgages rose to 6.61 percent last week, up from 6.4 percent two weeks ago, according to Bankrate’s national survey of large lenders.
Thus, both mortgage applications and sales of existing single-family homes dipped in the past week, in response.
The construction of single-family homes, however, picked up as builders, for their part, grew less pessimistic towards the market.
According to the CAR report, builders were “more optimistic” about present/future sales and said they were seeing an uptick in buyer traffic.
The labor market continued growing as well, although the growth pace eased up in March, especially in California.
California home sales were essentially flat in March, totaling over 280,000 sales on a seasonally adjusted annualized rate for the second consecutive month. Yet homes are selling faster and the sales-to-list-price ratio is improving, according to the CAR report.
Finally, the statewide median home price recorded a healthy increase of 7% on a month-to-month basis after six months of straight declines, though the inventory is struggling to keep up, with fewer new listings available.
According to the CAR report, however, signs point to a market with solid demand but the smaller inventory will hinder hopes for a dramatic rebound.
Naturally, with higher mortgage rates that can dramatically change monthly payments on the strength of a percentage of a point, mortgage applications decreased 8.8% from one week earlier for the week ending April 14, 2023, as mortgage interest rates inched up, according to the CAR report.
Rate changes are having a pinpoint effect, with purchase applications declining from the week prior and the same time a year ago, just as mortgage interest rates moved up for the first time in over a month. Refinance activity also fell on a week-to-week and a year ago basis.
The average 30-year fixed rate mortgage bumped up to 6.39% as of Thursday, April 20,2023, according to Freddie Mac. That’s 116 basis points higher than the same time from last year. For the most part, according to CAR, rates are stuck above 6%.
This continues to create an affordability issue for many potential homebuyers and with the limited inventory of homes, buyers will be more selective about when to pull the trigger on a home purchase.
