A Quick Overview of Housing Market Trends
The majority of homeowners are still satisfied with their current homes and are disinclined to sell. While the housing market may not be hot or cold, a few factors are contributing to the general sentiment. High interest rates and fewer homes on the market are contributing factors. Moreover, new construction is not significantly affecting the demand of new homes, so current homeowners are likely to feel satisfied with their existing homes. Rents are rising, making buying a new home from a Flat fee MLS listing even more difficult.
Low Mortgage Rates
If you’re looking for a quick snapshot of housing market trends, consider interest rates. Rising rates mean that homes are less affordable for many buyers. Consequently, prices continue to increase and there are fewer buyers. A quick look at housing market trends can help you determine whether prices are going to stay high or drop. One measure of affordability is active listings, which is the number of homes on the market in a specific period. In April, active listings decreased 19 percent. While this trend might be a sign that the market is slowing, this is not always the case.
Rising interest rates, fewer homes on the market, and high prices have kept millennials and Generation Z homebuyers from buying, making this market a seller’s market. As a result, new home construction has largely been stagnant. Meanwhile, the supply of new homes remains low. Despite this, a quick glance at housing market trends suggests that prices will remain high for the next five to seven years.
Strong demand for housing is outpacing supply, and builders are unable to ramp up production because of rising prices and shortages of building materials. A tense situation in Ukraine is pushing stocks down on Wall Street, while the dollar rose against a basket of currencies and U.S. Treasury prices rose. Prices for existing homes are surging, with the median increase of 15.4% year over year. Sales are concentrating in the upper price brackets.
The lack of supply of existing homes has also led to a high level of demand. A lack of supply causes prices to fall. In turn, a glut of homes on the market lowers home prices. The laws of supply and demand explain the relationship between the two. This is one of the primary factors that drive the price of a home. However, there are also other factors that influence the quantity of housing. For example, low interest rates cause prices to fall during a housing bubble.
In the past few years, the shortage of new homes for sale has pushed more buyers into the existing home market, creating a competitive environment. The low supply in the housing market has increased competition for the available properties, making it imperative for buyers to plan their search in advance and act quickly when they find a suitable home. Historically low housing inventories have contributed to the current low housing market. New builds have also been delayed, as builders have struggled to meet demand and stabilize building supply costs. In 2020, permits for new home construction fell 24% behind, and they are still not recovered in 2022.
A lack of housing inventory affects buyers on many levels, and sellers are holding back from listing their homes during this pandemic. While many current homeowners are putting off listing their homes, others are taking advantage of bargain-basement mortgages, investing in home improvement projects, and exploring refinancing options. In addition, the low supply in the housing market is also hurting the potential sellers, because finding a new home is much harder than selling the current one.
Spring Homebuying Season
The spring homebuying season is upon us. As the housing market recovers from an unsustainable 18.8% home price increase, more people are looking for affordable homes and trying to get in on the action before list prices skyrocket. Many people are also working from home and no longer want to be confined to a tiny apartment with noisy neighbors who sing in the morning. And winter buyers are less likely to move in the icy snow. That means competition in the spring real estate market is more fierce.
The spring buying season typically represents the busiest time of the year. Low inventory levels, pent-up demand, and new remote work needs all contribute to the brisk pace of spring homebuying. Homes go under contract in an average of 19 days. Fortunately, many first-time buyers are looking for affordable housing. A quick overview of housing market trends during the spring buying season will help you make the right decisions.
The current state of the housing market is quite strong, with few homes for sale and rising interest rates making home ownership more expensive. However, if you’re looking to buy a home, current conditions may be the best time to buy. While prices may not have reached breaking point yet, they’ll likely need to drop a bit to get a sale. Meanwhile, new construction is expected to grow as lumber prices continue to fall and builders are pulling permits faster than ever before.
Single-family housing demand has increased more than the supply of new homes. Housing starts in single-family homes reached 1.11 million units in the second quarter of 2021, compared to 467,000 for the same period last year. This is a clear sign of a rising housing shortage in the region. But this does not mean that the housing market is safe. Single-family home prices are continuing to rise, and the country’s population is increasing rapidly.