Although mortgage interest rates have been slowly rising – some pros say we could see more (you can see the lowest mortgage rates you can get here) — summer homebuyers have probably noticed that house price growth does not seem to be slowing as much as they would like. But the pros say there’s good news ahead: This hot real estate market is showing signs of cooling.
Prediction 1: Slower home price appreciation and potentially higher mortgage rates
According to Lawrence Yun, chief economist of the National Association of Realtors (NAR), with the decline in home sales and the rise in mortgage rates, the rise in house prices will slow in the coming months. “In December, the year-on-year house price appreciation could only be about 4% to 7%,” Yun said. Plus, he says, if inflation gets lousy and the Federal Reserve needs to be even more aggressive, then mortgage rates could top 7% and actually halt rising house prices.
Greg McBride, chief financial analyst at Bankrate, says demand is down and as sellers realize the price moon they’re asking for won’t happen, prices are being slashed. “Homes are still selling at higher prices than they started the year, but the pace of appreciation is slowing,” McBride says.
Jeff Tucker, Senior Economist at Zillow, adds, “Prices are still rising, but not as fast as we have grown accustomed to over the past two years. Prices could fall below today’s record highs in some markets later this year or next, but buyers shouldn’t expect to see home prices fall anywhere near prior levels. the pandemic.
Prediction 2: Expect Fewer Home Sales
“We enter the heart of the holiday season in July and August, when buyers and sellers divert their priorities from moving. This can lend itself to a market downturn at times, and I expect the impact of rising mortgage rates to coincide with this season to cause a bigger than usual pullback in sales activity, but home prices still have a lot of momentum and are likely to continue to grow,” says Danielle Hale, chief economist at Realtor.com.
Prediction 3: Buyers will have more houses of your choice
A big story of late spring and summer is the increase in housing stock. “The housing shortage has been acute for two years, starting in the summer of 2020, and house prices have risen in double digit percentages year-on-year. But the number of homes for sale started to rise in May and this trend will continue through July, which means buyers will notice they have more choice and more bargaining power,” says expert Holden Lewis. real estate and mortgage at NerdWallet.
And he adds that high house prices combined with higher mortgage rates are to blame for making homes unaffordable for more people. So, “buyers who stay in the market will face less competition and have more home choices,” Lewis says.