The Housing Recession Could Be Over, Some Economists Say Mortgage applications increased by 3% last week as home prices continue to decline.
By Madeline Garfinkle •
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Is the so-called "housing recession" coming to an end?
Mortgage rates fell from 6.71% to 6.48% last week, which is the lowest number in over a month. Meanwhile, mortgage applications rose by 3% as buyers previously priced out of the market swept in to take advantage of the falling prices.
The housing market steadily declined over the past year, following a particularly competitive market during and after the pandemic. After hitting significant lows in November 2022 — due to would-be buyers being priced out along with rising interest rates by the Fed to tame inflation — interested buyers have begun circling back as rates decline and the market cools.
In February, sales of previously owned homes were up by 14.5% from the previous month, according to the National Association of Realtors (NAR), marking the biggest monthly increase since July 2020. However, despite the uptick, sales are still down by 22.6% from last year.
Still, the rebound in sales and uptick in interested buyers may suggest that the housing market reached its peak low at the end of 2022.
Related: Mortgage Interest Rates Fall to Lowest Level Since September, Mortgage Demand Rises
"The housing recession is over as spring comes early this year and has realtors shouting hallelujah," Chris Rupkey, chief economist at markets research company FWD Bonds, told The Washington Post.
While mortgage rates are still nearly double their 3.22% average from a year ago, buyers are conscious of the fluctuations in the market and resuming their housing searches as mortgage rates decline, per The Washington Post.
"Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines," NAR chief economist Lawrence Yun said in a statement. "Moreover, we're seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs."
Related: Looking For Lower Rent? Rent Decreased the Most in These 11 U.S. Cities in January
