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Housing market shift: Buyers gain edge as fall approaches
As the summer housing market winds down, a new landscape is emerging for both buyers and sellers, according to Realtor.com’s Julie Taylor. With mortgage rates holding steady and expectations of future declines, the real estate scene is poised for an interesting autumn.
"Mortgage rates remained flat this week as markets await the release of the highly anticipated August jobs report," Sam Khater, Freddie Mac's chief economist, noted in a recent statement. He added, "Even though rates have come down over the summer, home sales have been lackluster. On the refinance side, however, homeowners who bought in recent years are taking advantage of declining mortgage rates in order to lower their monthly payments."
The prospect of further rate drops is expected to entice more buyers into the market in the coming months, breathing new life into what has been a sluggish summer for housing. This trend is likely to provide "buyers more options as the autumn approaches," according to Realtor.com senior economist Joel Berner.
As we step into September, Taylor offers a snapshot of the latest housing market data and its implications for both buyers and sellers:
Treasury yields and Fed expectations: In early September, the yield on 10-year Treasuries dipped reflecting expectations of potential rate cuts in upcoming Federal Reserve meetings. The next meeting, scheduled for Sept. 17–18, could see the central bank responding to recent inflation slowdown and unemployment uptick by lowering interest rates. This development may lead to an easing of mortgage rates, although it's important to note that while the Fed doesn't directly set mortgage rates, they often move in tandem.
Pricing trends: The summer market is concluding with a shift towards a more buyer-friendly environment. For the week ending Aug. 31, median list prices fell 0.9% year over year, marking the 14th consecutive week where the national median list price was at or below the corresponding week in 2023. August saw a national median list price of $429,990.
Inventory increases: The housing inventory has seen a significant boost, with the total number of houses for sale surging by 34.6% for the week ending Aug. 31 compared to the same time last year. This marks a 43-week streak of increasing for-sale homes. Fresh listings new to the market also saw a 5.5% year-over-year increase for the same week.
Seller behavior: Sellers are adapting to the changing market conditions. "The share of listings with price reductions reached the highest for an August in over five years as sellers adjust asking prices to better meet what buyers are looking for," says Realtor.com economist Jiayi Xu.
While the anticipated decline in mortgage rates might motivate more homeowners to sell, Xu doesn't foresee a significant increase in selling activity until next spring, "when rates are likely to be even lower, and the typical seasonal rise in inventory occurs.”
Time on market: Homes are spending more time on the market compared to last year. For the week ending Aug. 31, properties remained listed for an additional six days compared to the same period in 2023. August saw the typical home spend 53 days on the market, the slowest August in five years.
As we move into fall, the housing market appears to be tilting in favor of buyers. With more options available and the prospect of lower mortgage rates, buyers are feeling less pressured to make quick decisions. This shift provides an opportunity for both buyers and sellers to reassess their strategies in what promises to be an evolving real estate landscape.
Realtor, TBWS
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