For the first time all year, listings under contract are higher than they were last year at this time. Over 4 straight weeks in September, average conventional mortgage rates stabilized roughly between 6.1%-6.2%, and 5.6%-5.7% for FHA, which was the sweet spot for buyers to mobilize. Weekly accepted contracts increased 12% during that time frame, confirming expectations that conventional rates need to be sub-6.5% to see a meaningful shift in buyer demand.
Some believe the rates declined as a result of the Federal Reserve reducing the Federal Funds Rate by 0.5pt on September 18th, but mortgage rates had already dropped in anticipation of the Reserve’s actions. It was the follow through of that anticipation that gave consumers the certainty to act and gave the industry hope that relief was on the way.
As the 4th quarter begins, the housing environment for buyers is the most favorable it has been since December 2022, when there were more than 20,000 active listings in the MLS and a weekly average of 6,148 listings under contract. Back then, mortgage rates had also dropped below 6.5% and hovered between 6.1%-6.5% for 2.5 months. This October, mortgage rates are once again hanging in the mid-to-low 6% range, increasing buyer demand at a time when active listing counts are over 20,000 in the MLS.
Seasonally, this is the best time to be a buyer in Greater Phoenix. It’s typical to see active listings rise as weekly accepted contracts decline, giving existing buyers lots of homes to choose from and fewer competitors. Seasonally adjusted measures, like the Cromford Market Index are showing a market in balance, indicating very little fluctuation in price measures in either direction. In this environment, every drop in the mortgage rate means all properties go on sale.
Greater Phoenix has only seen a market this favorable for buyers twice in the last decade, and both times the opportunity was fleeting; lasting only 9 weeks in 2022 and 5 weeks in 2014.
Commentary written by Tina Tamboer, Senior Housing Analyst with The Cromford Report
©2024 Cromford Associates LLC and Tamboer Consulting LLC
