After years of skyrocketing home prices and increased mortgage rates, Americans have been feeling discouraged about their ability to purchase a home. However, recent data suggests that the housing market may be shifting in favor of buyers. The Federal Reserve’s actions to lower interest rates during the pandemic led to increased demand for homes with larger spaces, but when rates began to rise again in 2022, housing demand remained strong. A combination of homeowners holding off on selling to maintain low mortgage rates and a shortage of housing inventory caused prices to continue to rise.
Despite facing high prices and mortgage rates for the past two years, there are signs of relief on the horizon for potential homebuyers. Zillow’s recent report showed that nearly one in four home sellers offered price cuts in June, the highest level since 2018. Additionally, the average rate for a 30-year fixed-rate mortgage has fallen to its lowest level since mid-March. This, along with an increase in new home construction and the potential for the Federal Reserve to cut interest rates, could make buying a home more affordable in the near future.
Rick Sharga, a real estate consultant, believes that the housing market may be past its worst affordability point and that home price appreciation is slowing. The June Market report from Zillow indicated a decrease in annual appreciation and a growth in inventory. Homes in June took an average of 15 days to sell, providing potential buyers with more breathing room. Wall Street investors are predicting that the Federal Reserve will cut interest rates in September, potentially reducing monthly mortgage payments and encouraging more homeowners to list their properties.
While improvements may take time to be felt by homebuyers, different areas of the country are experiencing varying market conditions. New Orleans, for example, has transitioned into a buyers’ market, but Realtors note that lower home prices may be offset by other costs, such as increased homeowners’ insurance rates. Despite the potential for decreased prices, these additional expenses could impact a buyer’s decision-making process. Ultimately, the combination of lower mortgage rates, slowing home price appreciation, and increased inventory presents a more favorable outlook for those looking to purchase a home in the future.
