The average rate on a 30-year fixed-rate home loan fell to 6.09 per cent in the week ended February 2, down nearly a percentage point from a 20-year high of 7.08 per cent in October last year, according to Freddie Mac.

Meanwhile, according to a recent analysis by Realtor.com®, the number of homes for sale is soaring for the week ending January 28, up 71 per cent compared to the same period last year.

The drop in mortgage rates, coupled with the large number of homes on the market, is a potential win for homebuyers.

In her analysis, Danielle Hale, chief economist at Realtor.com®, said:- "A less competitive market could create opportunities for first-time homebuyers who are looking to become homeowners in 2023."

Not only are there more homes on the market, but buyers can take the time to look.

In January, homes typically spend 75 days on the market for sale. In the week ending January 28, homes were on the market for 17 days longer than the same week the previous year. This is the 27th consecutive week of increased time on the market.

Hale said:- "The slowdown in market growth is a relief to consumers, especially first-time buyers, who need more time to consider their buying options."

But homebuyers have no new listings, with the number of new listings down 9 per cent in the week ending January 28 compared to the same week a year earlier. The number of new properties entering the market has fallen for 13 consecutive weeks.

Hale explained:- "With mortgage rates still high, homeowners who are looking to sell and buy a home at the same time - and who may have a good rate on their current mortgage - may be pausing their moving plans to see if the market will improve before selling their home."

The median home price in January was $400,000, down from a peak of $449,000 in June. However, house prices for the week ending 28 January were still 7.7 per cent higher than the same week the previous year.

So while prices are still growing annually, they are slowing down from the double-digit growth seen for much of 2022.

Hale noted:- "Overall price growth continued to trend downwards in January as we move into 2023, suggesting that price growth will continue to normalise."

Despite three pieces of positive news coming out of the housing market - an increase in homes for sale, lower mortgage rates and stable home prices - the challenge of affordability remains a persistent issue for many potential homebuyers.

In addition, Hale predicts that "the Fed's determination to fight inflation will likely keep mortgage rates high in the near term."

But she also notes that interest rates are likely to fall later this year, so homebuyers who can't afford a home now can rest assured that 2023 looks bright overall.

Hale said:- "For buyers in a housing market that has seen housing inventory increase and prices fall back, 2023 promises to offer more opportunities."