As we head into the second quarter of 2023, the real estate market continues to show signs of change. Let’s take a look closer at the current state of the market and some insights on what it means for buyers, sellers and investors.
Housing Market Warming Up For Spring
The spring housing market is heating up as more buyers enter the market and apply for mortgages, indicating an increase in buyer demand. This is good news for sellers who are advised to prepare their homes to maximize their appeal and get listed at an ideal price. The recent decline in mortgage rates has helped to ramp up application activity, which is a welcome development for the housing market. If you’re planning to sell your house this year, now is the time to get ready. Joel Kan, VP and Deputy Chief Economist at the Mortgage Bankers Association explains:
“Application activity increased as mortgage rates declined . . . recent increases, along with data from other sources showing an uptick in home sales, is a welcome development.”
Lower Mortgage Rates Ahead Amid Calmer Inflation
Although the US economy is still dealing with high inflation, the housing market is showing signs of cooling down, with the Consumer Price Index rising by only 0.1% in March. The yearly rate of inflation also decreased to 5%, indicating a slowdown in housing inflation, which could benefit homebuyers by eventually leading to lower mortgage rates.
Rent growth is also expected to soften due to the robust construction of apartments, although more supply is needed to bring down housing costs, according to economists.
“Calmer inflation means lower mortgage rates, eventually,” said Lawrence Yun, chief economist at the National Association of Realtors
Homebuying Demand Hits Record High Since May
Early-stage homebuying demand in the US rose to its highest level since May last year, according to Redfin's Homebuyer Demand Index, which measures requests for tours and other buying services from agents. However, a lack of new listings is holding back sales. Pending sales fell 19% YoY nationwide in the four weeks to 26 March, with the scarcity of new listings limiting the supply of homes.
Although home prices have declined for the sixth-straight week and mortgage rates have fallen for the third week in a row, the uptick in demand has yet to translate into more sales.
Sources: Realtor.com, Keeping Current Matters, Redfin News
