Homebuying Demand Inches Up as Mortgage Rates Drop Amid Banking Turmoil

Although overall homebuying demand remains tepid, some buyers are returning to the market as mortgage rates decline from the four-month high they reached last week, Redfin reported. The cause of the decline: turmoil in the banking sector. 

Daily average mortgage rates dropped from 7% to about 6.5% over the weekend in the wake of Silicon Valley Bank’s collapse, according to Redfin. U.S. home prices also fell, dropping 1.8% year-over-year during the four weeks ending March 12, the biggest decline in more than a decade. 

“Buyers pounced when rates fell because they’re so volatile right now, which shows that there are plenty of people waiting in the wings for the right time to enter the market,” said Chen Zhao, Redfin economics research lead. “Where mortgage rates go from here largely depends on how the Fed reacts to chaos in the banking industry in the U.S. and abroad, alongside stubbornly high inflation.” 

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