The second half of the year is well underway and the housing market, so far, has shown a slight dip in mortgage rates and signs of falling home sales.
To us, the future may be uncertain. To experts, the future of the housing market looks somewhat predictable. These experts foresee stabilized and perhaps slightly lower mortgage rates, relatively high home prices, and lingering supply issues despite an uptick in inventory. We’ve all heard that a possible recession is headed our way, and industry experts are mindful of this as well.
Generally, the summer months are contained with slower home buying activity than the spring. During the pandemic, this was not the case, as many things were not as they seem during this time. However, experts believe we may be back to somewhat normal seasonal trends and can anticipate a normal third quarter that is slow on the home buying end, with prices possibly going down, but not as much as home buyers would like.
The summer time is traditionally slow for the housing market and this year is even slower than usual. Affordability is a key concern right now in the housing market, with both home prices and mortgage rates being high, and many first-time buyers are having a frustrating time. Buyer demand remains strong, home prices are continuing to rise but it is expected that they will come down in the months to come.
Mark Hamrick, senior economic analyst and Washington Bureau Chief for Bankrate, says that there’s a silver lining to all this: Rising inventory. He says “the supply of homes for sale may become a bit more favorable for prospective buyers,a dnw with that there will be less upward pressure on home prices and perhaps further actual declines in pricing trends”. “After sellers had held a distinct advantage in the housing market, the scales have begun to tip more in the buyers’ favor. This might be viewed as a journey toward a more normal market”. Nevertheless, he cautions, the composition of increased housing stock is unlikely to satisfy the desire of first-time buyers “to find great bargains or entry-level housing of the type they truly want and can truly afford”.
In terms of mortgage rates, they are not likely to dip back down to the record lows of early this year, but the rates do seem to be stabilizing. Lower rates are to be expected by the end of the year.
Federal action and growing fears of recession will bring mortgage rates lower, according to Greg McBride, CFA of Bankrate. “Any evidence of inflation receding will help lower mortgage rates, too”.
What this means for homebuyers and sellers is that there will be more inventory coming into the market, but this still remains a seller’s market. Even more inventory is needed to bring equilibrium to the market. Buyers who have lost out on contracts over the last two years may want to approach the market again. They will likely see less competition and are unlikely to have to engage in the bidding wars that we’ve seen the last few years.