It’s been a tough couple of years for prospective homebuyers. The housing market has been historically bad since the onset of the COVID-19 pandemic and housing prices haven’t shown any signs of cooling down — until now!
Several market indicators appear to trending in the right direction. Let’s take a look at why experts believe it will be more affordable to buy a home later this year.
THE NUMBER OF HOMES ON THE MARKET IS RISING
Since the beginning of 2022, the number of houses listed for sale has increased, which is a great sign for homebuyers. In 2021, housing inventory plummeted to record lows. As the inventory continues to climb, price tags will drop. Fortune also notes that less people are scheduling tours of homes.
SELLERS ARE SLASHING PRICES
According to the folks over at Redfin, 15% of sellers dropped their asking price in April 2022 — up 9% from April 2021. Unfortunately, it will take the market a while to catch up to those price adjustments. The cost to own a home currently sits at a record high. The median home sale price in April 2022 was a stifling $396,125.
THE FEDERAL RESERVE HAS STEPPED IN
Generally, the Fed likes to keep its hands off of interest rates. But, the current administration has made it a priority to tackle inflation. The housing market is a major driver of inflation, so the Fed has targeted lending institutions in recent months. In December, the average 30-year fixed mortgage rate was 3.11%. Five months later, the average 30-year fixed mortgage rate skyrocketed to 5.27%. That’s the highest rate since 2009!
BUILDERS ARE WORKING AT A RAPID PACE
For nearly three decades, the number of new constructions declined. Thankfully, developers are beginning to catch up to the demand. Builders currently have more homes under construction than any time since 1973. However, fears of a potential housing bubble burst could contribute to keeping homes unaffordable. Contractors are less likely to build if they fear the market will collapse.
Looking to a purchase home? Check out the 5 Best Mortgages For Homebuyers.