For a while now, the two major points of concern for the housing market have been climbing mortgage rates and low inventory. Despite these conditions having been present for years now, the market may be stabilizing itself, shifting in favor of homebuyers in the near future.
As per Realtor.com’s February Housing Market Trends report, demand may turn out to be equally as strong as this positive shift, as spring is known to be peak house hunting season.
Sellers Return to the Market
In 2022, when mortgage rates started to increase, the number of buyers and sellers entering the housing market decreased. Since so few sellers are now listing their homes, the supply of affordable homes has plummeted. Now, sellers seem to be coming back, indicating that they are adjusting to the slower housing market conditions.
As a result, the number of homes for sale increased by 27.5% year-over-year compared to February of last year. What’s more, Realtor.com economists report that new listing activity has reached its peak since February 2021, when mortgage rates dipped below 3%. Still, the market has a long way to go before it lines up with pre-COVID inventory levels.
Buyer Negotiating Power Increases
On the other side of diminishing sales is the fact that many homes have been on the market for longer periods than average. This gives buyers the leverage to negotiate prices with sellers, potentially increasing the number of affordable houses in turn. In fact, Chief Economist at Realtor.com, Danielle Hale suggests that lower home sales may have been the pull that the market needed in order to restabilize its supply and demand.
According to TheStreet.com, the number of homes with a price reduction went up 2% from February 2024, the highest increase in any February since 2016. This may indicate the market’s capacity to balance itself out in the near future, in terms of both buying and selling.
Considering Purchasing a Home?
As the real estate market works to stabilize itself, you may be considering switching from renting to homeowning. If this is the case, consider reaching out to The Connolly Agency at 732-261-0800! We can assist in all of your homebuying endeavors and answer any questions about the best home options for you.