Will Home Prices Cool Down this Fall?
With mortgage rates still historically low, housing demand shows no sign of letting up. According to Redfin, listings for homes are down 11% from July 2016 to July 2017, the lowest level since 1982. In the midst of peak selling season, prices continue to appreciate. Will home buyers catch a break this fall?
The market is growing increasingly competitive, with homes selling at faster paces each month. According to Realtor.com’s manager of economic research Javier Vivas, “home prices also remain stubbornly high, failing to show hints of the usual seasonal cooldown. Low and moderately priced homes are being snatched up especially quickly, keeping many would-be buyers from being able to get into the market.”
Post-Financial Crisis caution impacted today’s inventory quantity. Trulia’s analysis suggests if builders had increased housing supply by 2% rather than 1% over the past five years, housing inventory in 2017 would be 13% higher.
While some buyers are choosing to wait, others are getting off of the fence. The Federal Reserve projected three rate hikes during 2017 and has raised rates twice so far. Housing demand is likely to remain strong into the fall, as buyers lock in rates before additional hikes and price appreciation shows no sign of slowing down.
The good news is, homeownership demand remains solid, even after reaching a two decade low in 2014. The Homeownership Progress Index showed a demand increase in 21 out of the 50 metros tracked from 2015 to 2016.
Sources: CNBC, MarketWatch, Mortgage Bankers Association, Zillow