In our previous Spring market update, we discussed news about inflation, inventory, and the rise of home prices. As we continue through historic prices this year, we’re bringing you the latest market news and tools for success.
Sales of previous owned homes fell in April to the lowest pace since the midst of the COVID-19 pandemic in June 2020, reported the National Association of Realtors (NAR). NAR also reported that in April 2022, existing-home sales fell for the third straight month. Taylor Marr, the Deputy Chief Economist at Redfin, equates these market changes to the national mortgage rates rising at their fastest pace in history.
In early May 2022, the Federal Reserve chose to boost interest rates by a half-point, the biggest increase since 2000. Previously, the Fed would boost rates by a quarter of a point. This is to tackle inflation, which has been running at its highest rate in 40 years. The hope is if the Federal Reserve acts aggressively now, they won’t have to do as many rate hikes in the future.
The NAR reported that high rates have contributed to the rising costs of buying a home, which have grown at a national average of 55% since spring 2021. According to the Mortgage Bankers Association, mortgage purchase applications were down 17% nationally from 2021.
Despite these downturns, the market is still hot compared to previous years in the pandemic. For example, a seller may get ten offers instead of twenty. The Mortgage Reports expects there to be a slight increase to listings this summer. Redfin also reported that inventory will grow around the third quarter of this year, a trend we’ve seen over previous years.
Realtor.com also reported that at the end of 2021, the United States was 5.8 million single-family homes short, making us nationally five years behind in construction. Zillow researchers shared that 74% of industry experts believe the market will get back to pre-pandemic inventory levels by 2024.
There’s been an extreme increase in demand from the amount of millennials entering prime buying age and forming new households. Redfin also reported that relying on existing homeowners to list their homes won’t do much for inventory supply and demand. While their home will enter the market and contribute to supply, the previous homeowners will then have to buy again and thus contribute to demand. The real source to increase supply would come from new construction.
As inflation begins to level and more people return to the work force, experts are predicting a slight uptick in inventory. The Mortgage Bankers Association estimated that 1.71 million newly constructed homes will hit the market in 2022, an increase from 1.6 million in 2021.
The market will be busy this summer, with August being the end of bulk moving season. Realtor.com expects about 64% of home sellers will list their properties by the end of August. 43% of those sellers are expecting to list at a price below $350,000. While it’s still a seller’s market, it won’t be as intense as the peak of 2021. Start by preparing your finances and obtain a pre-approval now to make an offer as soon as you’re able to find a house you like.
There are several programs available from the Department of Housing and Urban Development (HUD) and other federal agencies that may help you purchase a home if you qualify, such as down payment assistance programs or lower down payment programs.
At McGlone Mortgage, our Loan Originators are armed with the tools, technology, and market knowledge you need and market knowledge to help you stay informed of local market changes and programs that may work for you. When you’re ready to discuss how we can make your housing dreams come true this year, contact us.
Sources: National Association of Realtors, Redfin, PBS News Hour, the Mortgage Reports, Realtor.com
McGlone Mortgage Group offers exceptional customer service and a convenient mortgage process. Whatever your financing needs, our goal is to exceed your expectations.