Following two weeks of declines, mortgage rates have once again seen an increase this week, with the average rate for a 30-year fixed-rate loan reaching 7.18% for the week ending September 14, as reported by Freddie Mac.
The trajectory of these rates in the near future hinges significantly on the outcome of the Federal Reserve meeting scheduled for Tuesday and Wednesday. During this meeting, the Fed will deliberate on whether to raise benchmark rates as part of their ongoing efforts to combat inflation. Despite concerns stemming from a U.S. Department of Labor report that indicated a 0.7% rise in the producer price index for August, surpassing July’s 0.4%, some market experts still hold the view that the Fed may not opt for a rate hike in the upcoming week.
Hannah Jones, an economic analyst at Realtor.com®, offers insight, stating, “Given the signs of cooling in both core inflation and employment, market expectations lean towards the Fed maintaining current rates in the next week’s meeting as they aim to steer the economy towards recovery without overshooting.” Should the Fed choose to maintain existing rates, it could offer stability to the housing market, enabling both buyers and sellers to plan for the future with greater certainty.
As we enter the fall homebuying season, we will explore the latest real estate statistics and their implications for both homebuyers and sellers in our upcoming feature, “How’s the Housing Market This Week?”
**Challenges Persist in Home Affordability**
While optimism surrounds predictions regarding the Fed’s actions, the autumn season typically brings more favorable conditions for homebuyers. However, these buyer-friendly conditions are unfolding at a measured pace, particularly concerning affordability.
In August, the median home price stood at $435,000, registering only a 0.7% decrease compared to the previous August. This suggests that prices have maintained relative stability year-over-year. Jones observes, “As the transition from summer to fall occurs, prices have settled slightly below their peak for the year but continue to hover around last year’s levels.”
For the week ending September 9, median list prices increased by 0.6% compared to the previous year. The key driver behind these elevated prices is the ongoing scarcity of homes available for sale.
**Where Are the Homes?**
Active inventory officially entered a three-month slump, resulting in buyers having 7.1% fewer fresh listing options compared to the prior year. This trend extends to overall inventory, encompassing both new and existing listings, which has declined by 5.1%.
High mortgage rates play a significant role in this dwindling inventory, as sellers remain hesitant to list their homes due to their existing lower-rate mortgages.
To address this challenge, some determined buyers have turned to newly constructed homes. Many builders are offering incentives, such as lower interest rates, surpassing what buyers might find in the open market.
**The Ideal Time to Buy Approaches**
For those ready to enter the market, it’s worth noting that sellers who do choose to list their homes are experiencing historically sluggish conditions. This creates a significant opportunity for vigilant buyers.
Jones explains, “As the busy summer market slows down, buyers may encounter reduced competition and relatively more available homes compared to recent months.” While active inventory remains below last year’s levels, signs of improvement are becoming evident.
Realtor.com’s economic team has pinpointed the optimal week for buying a home in 2023: October 1-7. Historical data suggests that buyers can potentially save over $15,000 on median home prices during this week, as new listings are projected to increase by up to 18.9% compared to the beginning of the year.
Furthermore, homebuyers who discover attractive homes at budget-friendly prices are eager to make offers. While the average time it takes to sell a home for the week ending September 9 remained consistent with the previous year, it is expected to accelerate in the coming weeks as the market continues its recovery from the housing slowdown observed in 2022, despite a lower level of demand, according to Jones.