The collapse of Silicon Valley Bank and the ensuing turmoil in the financial sector could spark more activity in the housing market, according to Nadia Evangelou, senior economist and director of research at the National Association of Realtors.
The NAR hasn’t yet published updated forecasts in the wake of the SVB fallout, but she told Insider that she now anticipates mortgage rates to fall faster than previously forecast.
“We had expected mortgage rates to come down to the lower range of 6% sometime in the second half of 2023, but now we may see that level in the coming weeks,” Evangelou said. “The housing sector reacts immediately to changes in mortgage rates. We expect some relief in affordability.”
Rates are already coming down. The average 30-year fixed rate dipped to 6.71% from 6.79% in the prior week, the Mortgage Bankers Association said on Wednesday. Application volume rose 6.5% from a week ago.
If mortgage rates dip to around 6%, then more Americans would be comfortable purchasing a home compared to when it’s around 6.7% or higher, Evangelou said.
But even with the uptick in mortgage demand, she said it’s too soon for the NAR to change its forecast for an 11% home sales decline in 2023 compared to 2022.
Last week — before regulators shut down SVB and Signature Bank — she told Insider that she didn’t expect a housing crash as the market has already bottomed, and that this year would mark a turning point for homebuying as the US avoids a recession.
That outlook hasn’t changed. But what has changed is her view of more hawkishness from the Federal Reserve.
If mortgage rates dip to around 6%, then more Americans would be comfortable purchasing a home compared to when it’s around 6.7% or higher, Evangelou said.
But even with the uptick in mortgage demand, she said it’s too soon for the NAR to change its forecast for an 11% home sales decline in 2023 compared to 2022.
Last week — before regulators shut down SVB and Signature Bank — she told Insider that she didn’t expect a housing crash as the market has already bottomed, and that this year would mark a turning point for homebuying as the US avoids a recession.
That outlook hasn’t changed. But what has changed is her view of more hawkishness from the Federal Reserve.
Source: Business Insider
