The housing market is in a state of flux, with home price growth slowing down and transactions at “recessionary lows.” Despite this, experts are seeing some positive signs, such as an increase in new listings and new-home sales. In this blog post, we’ll explore the current state of the housing market and what it means for buyers and sellers.
According to a recent Redfin analysis, U.S. home prices increased by 0.6% in February, which is in line with the pre-pandemic trend of monthly price growth. Daryl Fairweather, the chief economist at Redfin, noted that prices are growing at a similar pace to before the pandemic, despite higher mortgage rates. Similarly, Matthew Walsh, assistant director and economist at Moody’s Analytics, mentioned that home prices are appreciating at the same pace as before the pandemic.
However, while price growth has stabilized, the number of transactions remains low due to high mortgage rates. Fairweather pointed out that the level of transactions is at “recessionary lows,” with limited supply of homes also affecting sales. New listings have seen a slight increase, but supply growth is mostly tied to seasonal trends.
One factor affecting the housing market is the rate lock-in effect, which kept homeowners with low mortgage rates from listing their homes last year. This effect is slowly loosening its grip on the market, boosting available supply. Fairweather noted that as time passes, the rate lock-in effect will become less strong, especially as the Federal Reserve considers cutting rates later this year.
Despite the challenges in the market, new-home sales are showing some improvement. Walsh mentioned that new-home sales are at the high end of the pre-pandemic range, with buyers turning to new builds due to the tight supply of existing homes. Homebuilders are offering incentives such as mortgage rate buydowns or price cuts to attract buyers.
Overall, while there are positive signs in the housing market, challenges still remain for both buyers and sellers. It’s important for anyone considering buying or selling a home to stay informed about market trends and seek advice from real estate experts.
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