Is the Market Cooling Off?admin
The housing market has been on fire this year, but the first signs of cooling down are beginning to appear.
The market is sure to remain tight, with prices continuing to rise, inventories remaining low and buyer demand remaining strong.
However, price gains look to be moderating after the spectacular and somewhat unsustainable pace we have seen so far this year. Nationwide, home prices were up double digits from the previous year. Home prices were rising beyond the level that many buyers could stomach. Look for home price gains to slow this year, up another 3.5% by year-end, after a sharp 8.2% so far (Kiplinger).
Interest rates have fluctuated a bit in recent months, but they are still below 3%, making them attractive when compared to pre-pandemic rates. Since most homebuyers purchase as much home as their mortgage payment will allow, lower mortgage rates can quickly juice up demand and home prices, particularly when there is a shortage of homes like we’ve seen this year. Homebuyers will continue to get a great deal on their mortgage, thanks to mortgage rates hovering around those record lows.
Sales are slowing though, with existing homes logging sale declines over the past four months. Pending sales were also down after peaking in May. Inventories though slim, aren’t falling the way they had been, and available listings are trending up.
Competition is slightly less intense now than it was this spring. Some Realtors are reporting that new listings are no longer getting a flood of offers on the first day they hit the market, as was common earlier this year.
The market is shifting as buyers are holding off on purchasing due to buyer fatigue.
The wave of demand that powered the housing boom seems to be slowing as buyer optimism wanes. Buyers don’t want to be forced in a house they don’t love. Buying a home is a big deal and it’s not the time to make a rash decision and put in an offer on a home that you are not sure about.
Builders are trying to take advantage of strong demand for new homes and help aid low inventory. However, with building materials increasing in expense and skilled labor being hard to find, there is only so much they can do. On a national level, construction isn’t going fast enough to effectively ease the shortage, but it certainly has helped.
Experts predict we won’t be out of a seller’s market anytime soon but the signs of the market cooling off are there and it can only get better for buyers who are sticking with the market.