When will home price growth really slow? Will mortgage rates continue to rise? What should I know if I am trying to buy a home now? These are all questions we hear from readers, peers and others, so we asked leading economists and real estate professionals to detail exactly what they think will happen in the housing market this year.
Mortgage rates could continue to rise – but it depends on the economy
Already this year, average 30-year fixed interest rates have risen from just over 3% in January to around 6%, according to data from Bankrate. The growth may not stop there. (Check out the lowest mortgage rates you can get here.)
It depends on a lot of factors, including job reports, says Danielle Hill, chief economist at Realtor.com. “If the jobs report is too strong, it will likely trigger a new rise in mortgage rates in anticipation of greater action by the Federal Reserve.
even we Greg McBride, chief financial analyst at Bankrate, says that if we see consistent evidence that inflation has peaked, there is still a risk of higher mortgage rates. But he adds that the prospect of the Fed loading up on rate increases and doing more sooner rather than later could actually help reduce or even lower mortgage rates. “More rate hikes now mean less rate hikes later, and that means the timeline for maximum interest rates has been raised, and that means the eventual drop in rates due to a weaker economy is also happening sooner,” McBride says.
Here’s an interesting thought: “Real mortgage rates, the mortgage rate minus the inflation rate, were negative for the first time in 40 years, so mortgages aren’t as expensive as they look when controlling for inflation,” says Misha Fisher, chief economist at Angi. It is an Internet service company that connects users with vetted pros for projects and home services.
House price hike will subside…
Because of the housing shortage, housing prices will continue to rise in the coming months. Although the stock has improved, it will remain tight because home builders have reduced production of the single-family home, says Nadia Evanhilo, chief economist and forecasting director at the National Association of Realtors (NAR). However, since many homebuyers are priced in for lower affordability, home prices will not rise as quickly as they did in previous months. There will be a continued slowdown in housing prices. However, home prices are likely to continue rising double-digit year-over-year in August,” says Evangelo.
For her part, Hill says home prices, median and sales prices, tend to slow as the end of summer approaches. “I expect this year to be exemplary in this respect. On top of the usual seasonal slowdown, home price growth should continue to subside as the housing market resets,” says Hill. (Check out the lowest mortgage rates you can get here.)
…but overall home prices will continue to rise
Bankrate’s McBride, for his part, says asking prices are dropping from their lows as potential buyers pull back. “Sale prices will decline as the market cools, but this cooling is just a return to the kind of balanced market that has been absent for the past two years,” McBride says.
“In August, I expect home prices to rise at an average rate of one per year for four reasons,” says Angie Fisher. Among them, popular recurring sales indicators like Case-Schiller and FHFA are delayed by a few months to not catch the latest daily conditions. And although affordability is at a 30-year low, there are still supply and demand imbalances in the housing stock in much of the sought-after central district. Moreover, downward price pressure in housing is very common, and unless economic conditions force people to sell, they prefer to wait. Moreover, inflation is a wild card, she adds.
The demand is cold
Demand is falling at today’s prices, and home shoppers are fewer and farther away than they were in many cases of the pandemic, says Jeff Tucker, chief economist at Zillow. This calms the market and pushes it towards the rebalancing it needs. Expensive markets, where homebuyers are already on edge when it comes to affordability and therefore more sensitive to changes in mortgage rates, as well as pandemic superior markets that have seen sharp growth over the past two years, are likely to slow,” Tucker says.
Meanwhile, uncertainty about what the economy holds, reducing buyers’ desire to cash in on everything and maximizing their housing budgets when widespread inflation means other important categories like gas, groceries and utilities are eating up larger shares of their paychecks, he says. cardamom. “Depending on the region, we’re likely to see the biggest slowdown in home price growth in the West and South, where listing and sales prices are at their highest and where inventory has seen the biggest shift yet,” Hill says.
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