March 2023 MBS Highway Housing Index

Homebuyer activity resilient despite sharp rise in rates

MBS Highway’s March 2023 Housing Survey showed resilient levels of buying activity and an improved pricing environment — despite a +100 bps rise in average 30-year mortgage rates during February 2023.

After a dramatic improvement in last month’s survey, a steady 56% of respondents characterized their local buyer activity as ‘Very Active”, ‘Somewhat Active’, or ‘Steady’. That same figure was just 19% in November 2022.

Pricing pressure, meanwhile, continued to ease, with only 46% of respondents experiencing ‘Moderate’ or ‘Significant’ listing price reductions, down from 52% in February 2023 and 78% in November 2022. Nearly one-quarter of respondents indicated that they were now seeing ‘Significant’ or ‘Moderate’ price increases, up from 14% in February 2023.

While inventory levels rebounded in 2022, the number of available homes remains significantly below pre-pandemic levels. Coupled with the recovery in demand, this is driving a resurgence of buyer competition in certain markets. 32% of respondents said that homes were “Selling Quickly with Multiple Offers”, up from 20% in February 2023, and just 4% in January 2023.

Buyer activity levels and upward pricing pressure were strongest in the Mid-Atlantic, Southeast and Northeast regions. Price reductions were most prevalent in the Northwest and Southwest, but even there the majority of respondents characterized these as ‘Moderate’ only.

“It’s impressive to see activity levels hold up even with the recent (and we think short-lived) increase in mortgage rates. It’s also a powerful reminder of how strong underlying demand is. Inflation will continue to ease, and mortgage rates will follow it lower. That’s why we’re encouraging buyers to act before the stampede comes: sellers are open to negotiation and prices are down modestly — but this won’t last,” said Barry Habib, MBS Highway Founder and CEO.