Home Shopping During The Holidays Could Be Worth It – The Mortgage Note

With all due respect to the Hallmark Channel, we’d like to interrupt regularly scheduled Christmas programming to bring you this holiday market update.

Before you knock back that second or, okay, third, heavy-handed cup of eggnog, you might want to dive into your holiday stocking. You could score not only the traditional pair of socks or a nice scarf, but perhaps, well, maybe even a new home.

Yep, it might be that Santa’s helpers are stepping up their game — with a bit of a boost, of course, from the Federal Reserve.

Investors anticipate that the Federal Open Market Committee will once again cut rates at its upcoming meeting this week. They lowered the target range for the federal funds rate from its previous level of 5.25% to 5.5% down to 4.75% to 5% in September.

Although the Fed does not dictate mortgage rates, the market often follows its lead.

This could be good news for homebuyers and realtors who have had a tough year. High rates, combined with a lack of inventory and political uncertainty, have kept both buyers and sellers on the sidelines longer than expected.

Kelly McLain, a real estate advisor for RE/MAX Excalibur in Scottsdale, Arizona, told The Mortgage Note that as someone “in the business for 35 years, usually, this time of year I have four or five clients who are interested in selling toward the end of the year.”

This year, he continued, it’s substantially slower. “I only have one client who’s putting their home on the market in November. Many are waiting for election results; others are still waiting for further interest rate drops.”

Traditionally, the months of November and December are not optimal for homebuyers, but Paula Nirschl, a branch manager and senior loan officer at Guild Mortgage in Vancouver, explained that in her part of the Washington market, buying during these months is going to present “a unique opportunity” this year.

Nirschl said that enhanced affordability, less competition, and motivated sellers could make a difference this holiday season.

“I see sellers giving concessions to sell homes by paying closing costs or lowering their price,” she said.

In this area, Nirschl continued, average home prices are around $529,900 with homes spending an average of 27 days on the market — a bit higher than in 2023. Depending on location, million-dollar homes are averaging 45 to 60 days.

Jorge Montoya, branch manager of Guild Mortgage in Reno, Nevada, agrees that this holiday season may be different than in years past.

“We typically see demand start to slow for homebuyers. But, given the rate activity this year, we may see an increase as we move into November and December as we are currently seeing more buyers coming into the market,” Montoya said.

Montoya said lower rates mean more purchasing power for buyers. At the same time, sellers are motivated to close deals so they can move themselves. He has seen sellers pay for buyer’s agent commissions and contribute to closing costs.

For people who choose to wait until the new year to get into the housing market, they will likely benefit from lower mortgage rates if inflation eases as expected in 2025.

During their 2024 Annual Convention & Expo last month, leaders at the Mortgage Bankers Association presented their 2025 outlook, which included a baseline forecast for mortgage rates to end 2025 at 5.9% and remain close to that level for the forecast horizon.

However, inventory will likely continue to be a substantial hurdle to overcome in many markets, so potential homebuyers are advised to talk with a local real estate agent who understands the dynamics of their area.