As the year draws to a close, the housing market is showing promising signs of thawing after a prolonged freeze in 2023. A trifecta of factors — falling mortgage rates, a surge in new listings and a notable uptick in Redfin agent consultations — points to a potential resurgence in real estate activity.
Real estate tracking ETFs: the Vanguard Real Estate ETF (NYSE:VNQ), the Charles Schwab U.S. REIT ETF (NYSE:SCHH), the Real Estate Select Sector SPDR ETF (NYSE:XLRE) and iShares US Real Estate ETF (NYSE:IYR) are up between 17%-20% since Nov. 1.
With momentum building up in this sector as we head towards 2024, investors may want to consider these ETF picks for real estate exposure.
Also Read: Housing Market Heats Up: NAR Forecasts 13.5% Surge In Home Sales For 2024
Average Mortgage Rates Down To 6.64%
One of the key indicators of this shift is the decline in monthly mortgage payments. Average mortgage rates dropped to 6.64%, marking their lowest level since May and a significant decrease from the 8% peak in late October.
The median U.S. monthly mortgage payment, standing at $2,472 in the four weeks ending Dec. 17, reflects a $264 reduction from the October peak, though still showing an 11% year-over-year increase. The Federal Reserve’s shift towards more interest-rate cuts has accelerated this decline, providing a glimmer of hope for a soft landing in the economy.
Double-Digit Rise In Homeowners Contacting Agents
A notable development is the increased inventory in the housing market. Redfin reports a double-digit annual rise in homeowners seeking assistance from real estate agents to sell their homes. Redfin agents and mortgage brokers are reporting that buyers are starting to act on lower rates.
Redfin Economic Research Lead Chen Zhao remains cautiously optimistic, stating that the recent economic data suggests that mortgage rates may have peaked. As buyers return from the holidays, they will find a more extensive selection of homes, and interest rates are expected to remain in the mid-6% range. Nevertheless, the Federal Reserve’s cautious stance leaves a possibility of rates inching back up.
New Listings Up 9% YoY
New listings are up by 9% compared to the previous year, marking the most significant annual increase since July 2021. The drop in mortgage rates, especially within…
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