Market Update: Will Rates Keep Moving Up?
As we move into November, let’s take a look at how the housing market has moved since our last update in August. For those of you waiting on the sidelines to purchase a home, here’s a recap of key trends and insights to help you decide your next steps.
1. Mortgage Rates Are Climbing Again
After hitting a low for the year at 6.08% (Freddie Mac PMMS) on September 26th, mortgage rates have steadily climbed through late September and October. By late October, rates reached 6.72% and continued to rise, reaching 6.79% in early November. While rates remain below the high of 7.22% seen in May, the consistent upward trend in recent weeks is a reminder for prospective buyers to keep an eye on borrowing costs. If you’ve been holding off due to rate fluctuations, acting sooner rather than later could help you secure a more favorable rate in case they continue moving up through the end of the year.
2. Home Prices Continue to Rise
Home prices have remained resilient, increasing steadily throughout the fall. Nationally, single-family home prices have climbed by approximately 5.8% year-over-year. Inventory shortages remain a key driver, with demand outpacing supply in many areas. Buyers should keep in mind that while prices are up, they’re unlikely to fall significantly due to ongoing housing shortages and strong market fundamentals.
3. Inventory Challenges Persist
The inventory of available homes for sale has remained tight since late summer. New housing starts have slowed, with Q3 seeing the lowest levels since 2019. This has kept competition high among buyers, particularly in desirable neighborhoods. If you’re actively looking, working with a knowledgeable real estate agent can give you an edge in navigating competitive markets.
4. Affordability Pressures
Although mortgage rates have softened earlier in the year, the recent climb combined with rising home prices has continued to weigh on affordability. The national median home price has reached a record high of $364,750, which has stretched budgets for many buyers. For those considering a purchase, now is the time to revisit your financial plan and determine your buying power.
5. Foreclosure Activity Remains Low
One positive note is the continued stabilization of foreclosure activity. Filings have decreased by 10% from 2023 levels and remain well below pre-pandemic numbers. This reflects a healthy market with fewer distressed properties, though it also means fewer opportunities for deep discounts.
6. Buyer Sentiment and Trends
Many prospective buyers remain cautious, influenced by concerns over economic uncertainty and affordability. However, the recent uptick in mortgage rates has also created urgency for some buyers to enter the market before rates climb higher. Open house attendance has ticked up slightly since late summer, signaling that more buyers are dipping their toes back into the market.
What Does This Mean for You?
If you’re waiting to buy a home, these developments present both challenges and opportunities:
- Rising Mortgage Rates: Acting sooner could help you avoid even higher borrowing costs as rates continue to climb.
- Rising Prices: Acting sooner rather than later could help you avoid paying even more as home prices continue to climb.
- Tight Inventory: Partnering with a real estate professional can help you navigate limited inventory and identify opportunities.
Closing Thoughts
The housing market is always evolving, and staying informed is crucial. If you’ve been waiting on the sidelines, now may be the time to reassess your strategy and take advantage of changing conditions. Whether it’s locking in a mortgage rate before it climbs further or exploring creative ways to find your dream home, being proactive can set you up for success.
As always, we’re here to help you navigate the market and answer any questions you have. Reach out to us today to discuss your home-buying goals and how we can help you achieve them.
Stay tuned for updates, and let’s make your home ownership dreams a reality. Contact us today to discuss how we can help you plan for your future home in light of the latest economic developments.
Disclaimer: This information is provided for general informational purposes only and does not constitute financial or legal advice. Market conditions and financial regulations can change rapidly. Always consult with a licensed financial advisor, real estate professional or your loan officer before making decisions based on this information.
