Seventy percent of real estate sales people reported an uptick in homebuyers as a result of mortgage rates creeping downward in 2023, according to a recent survey from Assurance IQ, an insurance agency owned by Prudential.
For much of this year, rates rose, breaking the 7% barrier during the week of Aug. 17 and coming closest to an average of 8% on Oct. 26, according to Freddie Mac. But the latest Primary Mortgage Market Survey found the average for the 30-year fixed rate loan dropped about 50 basis points since then, to 7.39%.
While lower rates help spur demand, some are speculating that even if they go another full percentage point lower, the supply problem would not be alleviated.
High mortgage rates took a toll on new home sales in October, with a 5.6% decline compared with September, according to Census Bureau data. But year-over-year, sales increased 17.7%.
"We expect new home sales to soften further over the remainder of the year, but with mortgage rates recently pulling back somewhat, we don't expect the decline to be large," said Doug Duncan, Fannie Mae's chief economist in a statement in response to the new home sales report. "We believe the ongoing lack of existing homes available for sale will continue to support demand for new homes."
Of the top five factors influencing a home buying decision, price and affordability was at the top, cited by 63% of responding real estate agents, followed by financing & mortgage options next at 56%. Third was location and neighborhood, 54%; the house has family friendly features, 53%; and emotional appeal, 52%.
But even with higher interest rates, the market remains competitive. Over six-in-10 real estate agent respondents, 62%, said their clients had to make four or more offers before being able to close on a property. For first-time buyers only, the number is 68%.
Furthermore, 57.6% of offers made this year were for above the asking price, survey participants said.
When asked about the average age of their first-time buyer, 58% said it was between 25 and 34, with nearly another one-third putting it between 35 and 44. Those age groupings are primarily defined as millennials. A prior Redfin survey said some in this generation was losing interest in homeownership.
"Entry-level supply remains especially limited, even as millennials continue to age into their prime home-buying years," First American Financial Economist Ksenia Potapov in a comment on the new home sales data. "This month, 15% of new-home sales were priced below $300,000, up from 13% one year ago."
A separate survey recently released by Maxwell noted that one-fifth of buyers are single women, both repeat and first-time participants.
The 417 real estate brokers and agents surveyed in August for Assurance IQ have their own pet peeves about their clientele.
Topping the list are buyers who have high expectations but low budgets, followed by investing time in an uncommitted buyer; clients who are not responsive; clients who are late to, or, totally miss appointments; and sellers who put their property on the market at an unrealistic price.
