What is happening in the housing market now?
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Even though mortgage rates have been slowly rising — some pros say we might see more of that (you can see the lowest mortgage rates you can get here) — summer homebuyers will likely notice that the growth in rates Housing doesn’t seem to be slowing down as much as they would like. But the pros say there’s good news coming your way: This red-hot housing market is showing signs of cooling.
Prediction one: house prices will rise more slowly, and mortgage rates may rise
With home sales declining and mortgage rates rising, home price gains will slow in the coming months, says National Association of Realtors (NAR) chief economist Lawrence Yun. “By December, year-over-year home price increases could only be in the mid-single digits, from 4% to 7%,” Yoon says. What’s more, he says, if inflation gets ugly and the Federal Reserve has to be more aggressive, mortgage rates could cross 7% and actually halt home price gains.
Demand is declining, says Greg McBride, chief financial analyst at Bankrate, and as sellers realize the massive price they’re asking won’t happen, prices are being lowered. “Homes are still selling at higher prices than they were earlier in the year, but the pace of the rise is slowing,” McBride says.
Jeff Tucker, chief economist at Zillow adds: “Prices are still growing, but not as fast as we’ve been used to over the past two years. Prices may drop below record highs today in some markets later this year or next, but no Buyers should expect home prices to fall to anywhere near pre-pandemic levels.”
Prediction 2: Expect fewer home sales
“We are moving into the heart of the holiday season in July and August, when buyers and sellers shift their priorities away from housing moves. This can sometimes lead to a slower pace in the market, and I expect the impact of higher mortgage rates to coincide with this season to lead to a larger-than-usual decline. In sales activity, however, home prices still have a lot of momentum and are likely to continue to grow,” says Danielle Hill, chief economist at Realtor.com.
You can see the lowest mortgage rates you can get here.
Prediction 3: Buyers will get more Homes to choose from
One important story of late spring and summer is the increase in housing stock. “The housing shortage has been severe for two years, starting in the summer of 2020, and house prices have been rising at double digits year on year. But the number of homes for sale started rising in May and this trend will continue through July, which means buyers will notice they have more Options and more negotiating leverage, says Holden Lewis, a real estate and mortgage expert at NerdWallet.
He adds that rising home prices along with rising mortgage rates are the reason more people can’t afford homes. Thus, “buyers who remain in the market will face less competition and will have more homes to choose from,” says Lewis.
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