- Homes become less affordable as supply improves.
- Fed to increase interest rates through the summer of 2022.
- Home sellers received an average of 4.8 offers for every home sold.
Home values continue to rise, and with that comes rising rates on mortgages. Many homeowners are left wondering if we are entering a real estate bubble or if hope is underway as homes become less affordable. According to new data from Realtor.com, a turn may be in the near future.
With a surge in home prices and rising interest rates, the cost of financing a typical home has increased by almost 50 percent compared to a year ago, which has alleviated buyer demand in some markets.
In Florida, there were 30,793 single-family homes that closed in the month of March. Last year, 32,819 single-family homes have closed, which is a 6.2 percent decrease in activity, according to Florida Realtors®.
California reports that the smallest sales drop in 8 months occurred in March. There were 423,970 units sold, which was a 4 percent decrease compared to the same time last year, as reported by the California Association of Realtors®.
The number of homes for sale in New York State plummeted 22.6 percent, from 39,707 homes available during the same reporting period in 2021. According to a report released by the New York State Association of REALTORS®, the number of homes for sale has reached critically low levels.
Currently, there are heavy bets on interest rates rising to a range of 3 to 3.25 percent by the end of the year, as shown in contracts tied to the Fed’s policy rate.
“We want to see actual progress on inflation,” The Fed Chairman, Jerome Powell said just over a week ago citing more rate hikes may be possible due to the war in Ukraine and recent COVID-19 lockdowns in China.
It may be that the actual peak was in March but we don’t know that and so we’re not going to count on it.
As the Fed attempts to curb demand that has far exceeded supply, the housing market may begin to experience a momentous shift.
In April, newly listed homes were close to last year’s levels and only declined by 0.9 percent, according to Realtor.com, citing that there were more homes for sale in 4 of the 5 weeks that ended in April. However, sellers were listing at rates traditionally lower than the same time from 2017 to 2019.
On average, sellers received 4.8 offers for every home sold. Of these, 57 percent of buyers’ price offers were above the list price, according to a REALTORS® Confidence Index Survey published in March.
As we move through the peak season of 2022, home sellers are starting to play a moderate role in increasing the market’s inventory.