When Will Home Price Growth Really Slow? Will mortgage rates continue to rise? What do I need to know if I’m looking to buy a home now? That’s why we asked top economists and real estate experts to break down exactly what they think will happen in the housing market this year.
Mortgage rates may continue to rise, but it depends on the economy
Average 30-year fixed rates have risen to about 6% already this year, from just over 3% in January, according to bank rate data. And growth may not stop there. (See the lowest mortgage rates you can get here.)
Realtor.com chief economist Daniel Hale said it would depend on many factors, including employment statistics. “If the jobs data is too strong, it could lead to a fresh rise in mortgage rates in anticipation of bigger Fed action.
Greg McBride, chief financial analyst at Bankrate, said the risk remains that mortgage rates will rise until there is sustained evidence that inflation has peaked. But the prospect of the Federal Reserve bringing forward rate hikes and doing more sooner or later may actually help keep mortgage rates in check, or even lower them, he added. “More rate hikes mean fewer subsequent rate hikes, which means that the timetable for interest rate peaks is brought forward, and the eventual rate cut due to a weakening economy will be sooner.” It means that,” he said.
And here’s an interesting take. “Real mortgage rates, which are mortgage rates minus inflation, are now negative for the first time in 40 years, so mortgages aren’t as expensive as they appear when adjusted for inflation. and has faced higher home price increases than consumer price increases for most quarters of the last 40 to 50 years,” said a vetted professional in Home Projects and Services.
Home price gains cool down…
“Home prices will continue to rise in the coming months due to housing shortages. Inventories are improving, but they continue to be tight as homebuilders cut production of single-family homes.” said Nadia Evanhelou, senior economist and forecast director for the National Association of Realtors (NAR). But home prices won’t rise as fast as they did in the previous month, as many homebuyers have seen prices fall due to low affordability. Monthly house prices will likely continue to see double-digit year-over-year gains,” Evangelou said.
Hale said home prices, both median and selling prices, tend to decline toward the end of summer. “I think this year will be a typical year in that regard. In addition to the usual seasonal slowdown, house price growth should continue to slow as the housing market resets,” says Hale. (See the lowest mortgage rates you can get here.)
…but overall home prices will still rise
Bankrate’s McBride says asking prices are dropping from moonshot levels as willing buyers withdraw. “As the market cools, selling prices will level off, but this cooldown is just a return to the type of balanced market we haven’t seen in the last few years,” says McBride.
“In August, we expect mid-single-digit house price gains year-over-year for four reasons,” says Angi’s Fisher. Among them, popular repeat sales indices such as Case-Schiller and FHFA are several months behind and therefore do not reflect the latest day-to-day conditions. Affordability is at her 30-year low, but imbalances in housing stock demand and supply still exist in many attractive metropolitan areas. What’s more, downward pressure on home prices is so common that unless economic conditions force people to sell, they prefer to wait, plus inflation is Wild’s card, she adds.
demand is cooling
Demand has receded at today’s prices, and people are shopping at home farther and farther away than they were during much of the pandemic, said Jeff Tucker, senior economist at Zillow. “That’s cooling the market and pushing it toward a necessary rebalancing. Add to that the pandemic superstar market that’s seen tremendous growth over the past two years, and it’s already hitting its limits when it comes to affordability for homebuyers.” So the very expensive market, which is sensitive to changes in mortgage rates, is most likely to slow down, Tucker says.
Meanwhile, with growing uncertainty about what the economy will look like, inflation is rampant and other important categories such as gas, food and utilities are eating up a larger share of their salaries. Buyers are less willing to go all-in and make the most of their housing budgets when it means. Hale says. “By region, home price growth is likely to slow the most in the West and South, where both list and sale prices are high, and inventories are showing the biggest upturn to date,” Hale said. say.
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