Mortgage rates

While becoming more popular in the past year as mortgage rates have increased, the differential is small between those that did and didn't pay points for a permanent buydown, Freddie Mac said.

In the quarter, 80% of the homebuilder's mortgage customers used the rate buy-down incentive, the company said on a call with analysts.

Its January forecast reverses the call first made in April 2022 that the U.S. economy would slip into an extended downturn.

The move is somewhat counterintuitive relative to other market signals but Fannie Mae generally forecasts a net positive shift in lending conditions this year.

With traders reducing wagers on a rate cut at the Federal Reserve's March meeting and the yield on 10-year Treasuries rising to 4.11%, the highest since Dec. 12, real estate is primed to take a hit.

But the index is still well below pre-pandemic levels, suggesting momentum may be slow to build with borrowing costs still twice as high as they were two years ago.

The Fed governor offered some of the most detailed remarks to date around the Federal Open Market Committee's intentions to ease monetary policy this year.

For the past week, the benchmark 10-year Treasury closed above 4%, as the markets priced in an increase in the consumer price index.

December's shift in Federal Reserve policy gave a notable boost to the share of consumer respondents who think the affordability of home financing will improve.

But this week the 30-year fixed rate mortgage average increased for the first time in two months.

The year-end yield on the bond, a global anchor for markets and U.S. mortgage rates, is the culmination of a stunning rebound for Treasuries.

The U.S. may be less rate-sensitive than other countries due to its long-term mortgages but could face tighter credit from hard-hit financial institutions.

But the decline may be close to its floor, as wide spreads compared to 10-year Treasury yields hinder how far averages could fall.

Values declined in two regions and were flat in two others, according to the Federal Housing Finance Agency.

The S&P CoreLogic Case-Shiller index measures a period when 30-year mortgage rates were climbing toward 8%, shutting out increasing numbers of would-be homebuyers.

Money has been squeezed out of the market by central banks fighting to get an inflation surge under control. That's made borrowing more expensive for governments, corporates and consumers, and could keep denting spending well into next year.

Rates that have been below 7% for two consecutive weeks have given originators a gift at what's typically a slow time of year, Freddie Mac said.

Even if lower rates boost inventory and shift sales from new to existing homes, these companies are well-positioned to deal with the change, analysts said.

Indicators are starting to align, that with falling interest rates and prices, buyers and sellers will return to the housing market in 2024, a trio of interested parties commented.

Contract closings increased 0.8% from a month earlier to a 3.82 million annualized rate, according to the National Association of Realtors, and ahead of estimates of 3.78 million units.