A Possible Chance For Home Buyers?
Existing home sales have recently seen a downward trend in February as home price increases and upward interest rates have occurred. Per a recent report from the National Association of Realtors (NAR), sales of existing homes decreased by 7.2% from the month prior and were 2.4% lower from the same time as last year.
“Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” National Association of Realtors Chief Economist Lawrence Yun, said. “Some who had previously qualified at a 3 percent mortgage rate are no longer able to buy at the 4 percent rate.”
Data has shown that the median sales price on existing homes has risen 15% since February of last year. However, the price increases have done very little in reducing competition as bidding wars are still very common due to lack of inventory.
Inventory levels did see a slight increase by 2.4% in February from the month before. However, by comparison to February of 2021 it was still down 15.5%. Yun anticipates that prices will slow their pace in growth as more homes come on the market via new construction.
“The sharp jump in mortgage rates and increasing inflation is taking a heavy toll on consumers’ savings,” he said. “However, I expect the pace of price appreciation to slow as demand cools and as supply improves somewhat due to more home construction.”
The federal reserve has recently bumped up interest rates by a quarter of a percentage point mid month with more hikes to likely be on the way. Buyers can expect some changes that may both be against or in their favor as a result. While increased interest rates will raise costs it may help cool the frenzied demand that we are now seeing. In the end, increasing rents may still persuade first time buyers to keep looking despite any rate increases.