“We expect a continued rise in purchase demand,” added Khater.
Homebuyers, however, are still facing overheated home prices and low supply of homes for sale. Home price gains are shrinking, but some markets are still beyond the reach of most entry-level buyers. Mortgage applications to purchase a home moved higher last week, as rates fell.
“What happens in the coming spring months is what is most relevant for the industry and in our attempt to gauge how consumers respond to lower mortgage costs,” said Peter Boockvar, senior investment officer with Bleakley Advisory Group. “The weekly purchase mortgage data seen yesterday points to a possible green shoots start.”
Lower mortgage rates certainly boost buying power, but the reasons behind lower rates, namely a weaker economy, could diminish buyer confidence. That may be part of what’s behind the drop in pending sales.
“This suggests a mixed sales trend may be on the horizon for spring, as buyer confidence, boosted by more homes and lower mortgage rates, may be challenged by concerns about whether economic growth can continue,” said Danielle Hale, chief economist for realtor.com.
An important read on the economy, the monthly employment report, is set for release at the end of next week. It could move rates dramatically in either direction.
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