Falling Mortgage Rates Are Bringing Buyers Back
If you’ve been hesitant to list your house because you’re worried no one’s buying, here’s your sign it may be time to talk with an agent. After months of high rates keeping buyers on the sidelines, things are starting to shift. Rates are already coming down due to a number of economic factors. And yesterday the Federal Reserve cut the Federal Funds Rate for the first time since they began raising that rate in March 2022. And while they don’t control mortgage rates, this sets the stage for mortgage rates to fall even further than they already have – especially since more cuts from the Fed are expected into next year. And lower mortgage rates are bringing more buyers back into the market. Lisa Sturtevant, Chief Economist at Bright MLS, says: “A drop in the cost of borrowing will help fuel more homebuyer demand . . . Falling rates will also bring more sellers into the market.” The best part? You can take advantage of that renewed buyer interest. As Rates Fall, Buyer Activity Goes Up The graph below illustrates the relationship between falling mortgage rates and rising buyer activity. The orange line represents the average 30-year fixed mortgage rate, while the blue line shows the Mortgage Bankers Association (MBA) Mortgage Application Index, which tracks the number of mortgage applications. As you can see, as mortgage rates (orange) come down, the Mortgage Application Index (blue) rises, showing more people start to re-engage in the process (see graph below): What This Means for You According to the National Association of Realtors (NAR), home sales increased in July, which was a welcome shift after four straight months of declines. If you’re a homeowner thinking about selling, this uptick in buyer activity works in your favor. More buyers means more competition, which can lead to higher offers and shorter time on the market for your house. And, according to Edward Seiler, AVP of Housing Economics at the Mortgage Bankers Association (MBA), this trend is expected to continue: “MBA is expecting that slower home-price appreciation, coupled with lower rates, will ease affordability constraints and lead to increased activity in the housing market.” All in all, the market is becoming more accessible to a wider range of buyers, which could result in even more people looking to purchase a house like yours. With more buyers entering the market, now’s the time to start getting your house ready to sell. Bottom Line The recent decline in mortgage rates is already driving more buyers into the market, and experts project this trend will continue. Work with a local real estate agent to take advantage of this increased buyer demand and get your house ready to sell.
What’s Next for Home Prices and Mortgage Rates?
What’s Next for Home Prices and Mortgage Rates? If you’re thinking of making a move this year, there are two housing market factors that are probably on your mind: home prices and mortgage rates. You’re wondering what’s going to happen next. And if it’s worth it to move now, or better to wait it out. The only thing you can really do is make the best decision you can based on the latest information available. So, here’s what experts are saying about both prices and rates. 1. What’s Next for Home Prices? One reliable place you can turn to for information on home price forecasts is the Home Price Expectations Survey from Fannie Mae – a survey of over one hundred economists, real estate experts, and investment and market strategists. According to the most recent release, experts are projecting home prices will continue to rise at least through 2028 (see the graph below): While the percent of appreciation varies year-to-year, this survey says we’ll see prices rise (not fall) for at least the next 5 years, and at a much more normal pace. What does that mean for your move? If you buy now, your home will likely grow in value and you should gain equity in the years ahead. But, based on these forecasts, if you wait and prices continue to climb, the price of a home will only be higher later on. 2. When Will Mortgage Rates Come Down? This is the million-dollar question in the industry. And there’s no easy way to answer it. That’s because there are a number of factors that are contributing to the volatile mortgage rate environment we’re in. Odeta Kushi, Deputy Chief Economist at First American, explains: “Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates. Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates.” What happens next will depend on where each of those factors goes from here. Experts are optimistic rates should still come down later this year, but acknowledge changing economic indicators will continue to have an impact. As a CNET article says: “Though mortgage rates could still go down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.” So, if you’re ready, willing, and able to afford a home right now, partner with a trusted real estate advisor to weigh your options and decide what’s right for you. Bottom Line Connect with a trusted real estate agent to make sure you have the latest information available on home prices and mortgage rate expectations. Together you’ll go over what the experts are saying so you can make an informed decision on your move.