Falling Mortgage Rates Bring Some Home Buyers Back to Market – The New York Times

Falling Mortgage Rates Bring Some Home Buyers Back to Market – The New York Times

Earlier in the pandemic, when many urbanites were leaving New York to work remotely in far-flung locations, Molly Parker Wade instead moved from the West Coast to Brooklyn to be closer to her family.

After a year of renting, Ms. Wade, a 35-year-old public relations executive for Amazon, was ready to buy, just as the cost of home loans began to climb sharply. Late last year, mortgage rates hit a two-decade high, putting a chill on the housing market — and her buying plans.

“I spent 2022 learning about mortgages,” she said.

Undeterred by high rates, Ms. Wade closed on a $975,000 one-bedroom apartment in Crown Heights in December. “It felt like the right thing to do at the right time,” she said.

Home buyers are edging back into the market after being sidelined last year by a jump in borrowing costs and soaring housing prices. Although mortgage rates are coming down — the average rate on the most common home loan fell to a five-month low this week, making purchases relatively more affordable — real estate experts say what matters more for buyers and sellers now is the state of the economy, which is especially hard to gauge.

“It’s jobs, jobs, jobs,” said Sam Khater, the chief economist at the mortgage finance giant Freddie Mac. Although the economy is solid, “if all these recession forecasts come to fruition, it would be a big deal,” he added.

The U.S. economy grew at an annual rate of 2.9 percent in the fourth quarter of last year, the government reported last week, as Americans continued to spend despite stubbornly high inflation. The International Monetary Fund this week projected that the U.S. economy would slow this year, and the jobless rate would rise, but there was “a narrow path that allows the U.S. economy to escape a recession altogether, or if it has a recession, the recession would be relatively shallow,” according to the organization’s chief economist.

As part of their effort to tame rising consumer prices, Federal Reserve policymakers raised interest rates again on Wednesday, by a quarter of a percentage point, to a range of 4.5 percent to 4.75 percent, the eighth increase in 11 months. Fed officials are trying to slow the economy enough to bring inflation back under control, without inducing a severe recession.

“Activity in the housing sector continues to weaken, largely reflecting higher mortgage rates,” the Fed chair, Jerome H. Powell, said after the central bank’s announcement.

The Fed’s actions have helped cool the once-hot housing market, but mortgage rates have recently started to fall again — partly on investors’ expectations that the central bank’s campaign of rate increases is nearing an end — which could spur more activity in the housing market. New-home sales, which are particularly sensitive to changes in mortgage rates, rose 2.3 percent in December from the month before, the Census Bureau reported last week.


Source: https://news.google.com/__i/rss/rd/articles/CBMiTmh0dHBzOi8vd3d3Lm55dGltZXMuY29tLzIwMjMvMDIvMDIvYnVzaW5lc3MvbW9ydGdhZ2UtcmF0ZXMtaG91c2luZy1tYXJrZXQuaHRtbNIBUmh0dHBzOi8vd3d3Lm55dGltZXMuY29tLzIwMjMvMDIvMDIvYnVzaW5lc3MvbW9ydGdhZ2UtcmF0ZXMtaG91c2luZy1tYXJrZXQuYW1wLmh0bWw?oc=5

Housing market