US Housing Market Shows Signs of Life After Mortgage Rates Fall

Even before the Federal Reserve has begun cutting interest rates, the mere anticipation of such moves is already thawing the US housing market.

A series of reports this week showed activity coming back to life: Housing starts surged to a six-month high, sales of previously owned homes picked up from a 13-year low and builder optimism was boosted by increased interest from prospective buyers. Meanwhile, Americans’ home-buying plans rose this month by the most in more than a year.

The bounceback comes as mortgage rates have declined by more than one percentage point in eight weeks, the biggest drop over a comparable period since 2009. While the Fed last week signaled it’s finished its run of rate hikes and is preparing to cut in 2024, investors had already been scooping up Treasuries, driving down yields along with borrowing costs — such as mortgage rates — that tend to reflect fluctuations in the bond market.

“There are definitely green shoots on the housing front,” said Charlie Dougherty, senior economist at Wells Fargo & Co. “You’re already starting to see the effects of lower expected interest rates boosting a lot of different facets of the housing market.”

Steep Slide in Mortgage Rates