Understanding the Impact of Falling Mortgage Rates on Today’s Real Estate Market

As we navigate through December, the real estate market is experiencing a refreshing change of pace. The catalyst? A notable decrease in mortgage rates. This shift is not only bolstering builder confidence but is also rekindling interest among potential homebuyers.

Builder Confidence on the Rise

December witnessed a significant improvement in the builder sentiment for the first time in four months. The confidence index for single-family homes, as reported by the National Association of Home Builders (NAHB), rose to 37. While still under the 50-point mark, which signifies a positive outlook, this rebound indicates a shift in the tide. This increase in confidence aligns with a substantial dip in mortgage rates, dropping by about 50 basis points and falling below the 7% threshold.

NAHB Chairman Alicia Huey remarked, “The recent dip in mortgage rates has led to an increase in buyer traffic, as many who were previously priced out are now reconsidering their options.” This resurgence is crucial for addressing the nation’s housing shortage and the broader affordability crisis.

Economic Optimism Fuels the Market

The broader economic landscape is showing promising signs, yet local forecasts in New Hampshire and Massachusetts offer a nuanced perspective. Nationally, the decrease in November’s annual inflation rate to 3.1% and the addition of 199,000 new jobs paint an optimistic picture. This positive outlook is further bolstered by the Federal Reserve’s decision to maintain the short-term policy rate.

However, when we zoom in on the local real estate markets in New Hampshire and Massachusetts, the story slightly diverges. Despite the national trends, the New Hampshire Association of Realtors and the Massachusetts Association of Realtors are forecasting a stable market, predicting flat to a slight increase in home prices for the region. This local forecast suggests a more resilient market in these areas, possibly due to specific regional economic factors or housing demands.

While home prices nationally have seen a 1.5% year-over-year increase and are expected to follow a seasonal downward trend, with Realtor.com® data scientist Sabrina Speianu projecting a potential 2% decrease by year-end, the local markets in New Hampshire and Massachusetts seem poised to maintain or slightly increase their home values. This discrepancy underscores the importance of understanding local market dynamics in addition to national trends, especially for buyers and sellers operating in these areas.

The Changing Face of Home Selling

One of the most notable changes is the easing of the mortgage “lock-in” effect. This trend had previously discouraged homeowners from selling due to high mortgage rates. However, with rates becoming more favorable, there has been a 6.8% increase in new listings compared to last year.

For Homebuyers: Time is of the Essence

For homebuyers, the market conditions are favorable, but the window of opportunity may be brief. Homes are spending fewer days on the market – on average, 52 days in November. This faster pace means that homebuyers need to be decisive to secure their desired properties.


The recent drop in mortgage rates marks a pivotal moment in the real estate landscape. It’s a boon for builders and buyers alike, potentially leading to more accessible home prices. As we approach the end of the year, the market is ripe with opportunities, but it requires buyers and sellers to remain agile and informed.