Spring is typically the busiest season in real estate, and despite some setbacks from these past few years, “For Sale” signs are still popping up in front of homes this spring. It may be to soon to tell whether the frozen market will thaw throughout the season, but there are some clues that point in both directions.
High Mortgage Rates and Home Prices
As of right now, the average 30-year mortgage rate is 6.65%, not low by any means. Having dropped a bit from January, analysts predict that rates will stay within a small range of this number for the time being, staying consistent for this spring real estate market. This prediction makes sense with the Federal Reserve’s claim that it will not lower interest rates until later in the year.
Selma Hepp, chief economist at real estate analysis firm Cotality, says market fluctuation could bring down mortgage rates because mortgages typically follow the yield on 10-year Treasury bonds. These bonds respond to investors’ concerns about the economy, of which there are many now: a slowing job market and rising risks of a recession, to name a couple. Inflationary policies such as tariffs also ensure that these rates do not lower.
Higher home prices in general have also contributed to the slowed housing market. The median home price has skyrocketed by 47% in the last five years!
More Homes on the Market
Last year marked the slowest housing market since 1995, simply because there were not many homes for sale. Good thing for buyers, in February, there were 17% more existing homes for sale compared to last year, as well as a 10% increase in new listings in March compared to last spring. This increase in listings should translate to more sales, but some express concerns about a lock-in effect, where homeowners with low interest rates will never move. Luckily, data shows that people do eventually end up moving.
For sellers, more competition may mean will have to be more flexible about pricing this spring, and this is already starting to happen.
All sides of the homebuying process will have to adjust to and find a way stabilize the spring market. With economic uncertainty and all other parts of the equation purchasing a home still may not become a reality for many prospects in the coming months.
What’s Next?
If you are interested in speaking with a local expert about this topic and how it may affect you, call 732-361-0800 to reach The Connolly Agency Real Estate. We would be happy to assist you! Otherwise, you can check out our website for all things real estate related, including houses currently on the market and more!
Information courtesy of NPR.org