Sales of previously owned homes increased in the month of January relative to the prior month.
Since last fall, mortgage rates have decreased by about a percentage point, bringing buyers back into the market while house prices remain near all time highs.
The chief economist at the NAR (National Association of Realtors) says that consumers are taking advantage of relatively low interest rates. As rates have begun to increase again, the demand should slowly settle down.
While many aspects seem to be in favor of the buyers, the buyers are still struggling to find homes. This shortage of housing inventory is partially due to sellers being reluctant to sell their mortgages for higher ones. This low supply also increases the prices of homes, making it even harder for buyers to find something in their range. However, new listings have risen from January a year ago, another good indicator for buyers in the market.
The shortage of existing homes in the market also bodes well for the construction industry. To meet the demand of buyers, more houses need to be built. However, as the FED delays interest rate cuts even more, this demand should likely shore up.
Overall, economists seem to believe that the housing market will soon return to a seller's market. When the FED eventually cuts interest rates, mortgage rates will also go down. Sellers who previously feared a new, high mortgage rate will be more willing to sell their current homes.
Link: Home Sales Rebounded in January After Last Year’s Sharp Decline - WSJ
Great thought! I agree with you that the increase in new listings offers some hope. The potential shift back to a seller’s market told us to keeping an eye on Federal Reserve decisions, as they could influence mortgage rates and seller behavior in the near future. As rates potentially rise, sellers may become more motivated to list their homes, balancing supply and demand dynamics. However, I wonder what if the Fed keep rates stable or raise the rates (I know they unlikely to do so, but just assume), is there anything different? Will we be in situation of housing shortage?
ReplyDeleteVery interesting! It is good to see that this market will stabilize and benefit both buyers and sellers. Do you foresee a problem with how high housing prices are, or is this something that could be solved with lower mortgage rates?
ReplyDeleteI also wrote my blog post about the housing market, specifically the struggle for first-time home buyers to find homes for sale and especially affordable ones. While sales and the mortgage rates have been slightly better this year, there is still the issue of a lack of housing like you mentioned. The article I read talked about the rise of condominiums, subdivisions and mini homes because not only are they more affordable but they take up less space. While mortgage rates will eventually go down and the market will become more of a seller's market, it appears that the trend of mini homes and apartments is here to stay and will continue to saturate the housing market.
ReplyDeleteIs there concern that when the sellers who feared higher mortgage rates go to sell their homes there will be no buyers due to high housing prices in general?
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