By Mike Bodeen · 20 February 2023
Recent Rising Rates to Hinder?
The new year, along with it’s former lower mortgage rates has brought about a wave of local home buying activity that’s been nothing short of amazing.
Referring to the chart below, which is worth a thousand words, we see that the “Listings Under Contract” bottomed out on the 31st of December with just 5529 homes in escrow – the lowest January level in 15 years since 2008.
Now before we get too excited, the beginning of the year always starts at its lowest point and sharply increases the first two months of the year. And though we are, per The Cromford Report, our listings under contract are 27% below one year ago, we must remind ourselves that the beginning of 2022 was fiercely off the charts as far as sales, thus confirming our market continues to normalize. And normal is really good.
In fact, the Cromford Market Index (CMI), now sits at 124, firmly in a seller’s market territory (above 110), but not far off balance. Both buyer demand and seller supply are below normal, but they seem to be moving in tandem. (see chart below)
That’s the upbeat news.
The downer news is that mortgage rates have jumped back up to the 7% range for the 30-year fixed rate mortgage, due in large part to the market reacting to lingering inflation, including a still vibrant jobs market with very low unemployment. We mentioned last week, that Arizona’s unemployment rate dropped to 3.7%.
When our rates were heading south to 6%, that provoked quite a buyer response. I believe we’ll see a slow-up in buyer activity until rates begin to lower again, but I could be totally off the mark on this as well. Trying to predict this market makes as much sense as trying to herd cats with your feet.
Market data referenced in this article comes from The Cromford Report.