As many would-be buyers are aware, the market’s performance is being largely controlled by one factor: mortgage rates. During the first half of 2023, these kept housing in a state of suspended animation in many areas.
The price of borrowing puts the kibosh on many would-be buyers’ plans, while homeowners who recently purchased with mortgage rates of 3% or less are described as wearing “gold handcuffs”. This is because selling their current home would mean having to borrow at a much higher rate—currently around 8% for 30-year, fixed-rate financing as this newsletter goes live.
Here’s what industry experts are predicting:
- Mortgage rates will cool slightly, reaching 6% by the end of the year.
- Domestic migration into Sun Belt cities is expected to continue.
- An increase in new construction will improve housing inventory numbers.
So, what can homebuyers expect for the rest of 2023? While the Federal Reserve is expected to continue raising rates until inflation is decisively under control, industry leaders foresee rates dropping and home sales picking up when the Fed rate hikes are brought to an end.
As mortgage rates cool, inventory is expected to increase, helping to improve today’s low inventory of existing homes for sale. The magic number for rates? When they fall to 5.5%, buyers are expected to go into action, with a flood of inventory hitting the market if rates reach 5%.
Meanwhile, homebuilding is picking up. May brought a significant uptick in the sale of new single-family homes, which rose 20% year-over-year and 12.2% from April.
In conclusion, industry gurus are predicting that lower rates and prices will appear during the next four to six months, with average prices falling around 0.6% when compared to 2022 prices.
Let us help you with the home mortgage process so you can own your first home and achieve the American dream. Core Bank’s team of lenders are committed to helping you achieve your dreams. Contact someone from our team and apply today!