According to one expert, homebuyers looking for affordable prices this spring aren’t likely to find any easing in interest rates or home prices anytime soon.
Zillow senior economist Nicole Bachaud recently told Yahoo Finance Live: (video above). “We will still see interest rates in a tight spot.We will still see inventories in a tight spot.”
Bachaud forecast that mortgage rates are likely to remain in the 6.5% range for the rest of the year. That’s where they’ve been bouncing around since the beginning of the year. The average interest rate for a 30-year fixed mortgage rose to 6.38% last week, according to a Freddie Mac survey. That’s the highest level in a month since the bank failures that swept Silicon Valley in March.
Rising interest rates, combined with higher home prices and unruly inventory shortages, could erode the short-lived advantage they had this winter, pushing budget-minded buyers back to the sidelines once again.
“What we’re seeing right now is very low inventory in the market, and that’s really causing a lot of fluctuation and an increase in these rates,” said Bashaw. and sellers are prevented from interacting.”
Stocks surge, but remain low
Inventory issues continue for buyers as the spring shopping season begins.
According to Altos Research, 80,000 single-family homes had entered the market as of April 24, the largest share of new listings since September, but Altos Research said 21,000 would soon enter the market. The contract was signed and it was the largest amount in a week since July 2022.
Overall, there are 414,000 single-family homes on the market nationwide, up 2% from a week ago. We currently have 50% more active inventory than last year, but still 50% less than in 2019.
“Limited inventory is actually slowing sales,” Altos Research CEO Mike Simonsen said in a blog post. “People are basically buying everything they can get their hands on.”
As a result, tighter inventories pushed home prices higher. The median single-family home price rose to $444,481 this week, up 1% from a week ago, according to Altos Research.of Average New Listing Price and contract housing also increased from the previous week.
“We’ve seen prices start to rise this spring, and I think a lot of that is due to the fact that buyers are shopping and there are no homes for them to see,” said Bashaw. “Our latest[list]is down quite a bit.
Homeowners reluctant to sell
While buyers are looking for affordable deals, most homeowners are looking to sell this spring.
According to Realtor.com, at least two-thirds of homeowners have current mortgage rates of 4% or less, well below the current rate of 6.39%. Recent data also found that an estimated 82% of potential sellers who need to buy after the sale feel trapped by low prices.
“There are sellers who are locked in at a 3% rate and are unwilling or unable to let go of that home and are sitting in their existing inventory,” Bashaw said.
Sellers who have continued to put their goods on the market are beginning to realize that they no longer have to bargain as they did in the winter.
According to Altos Research, only 29.4% of homes on the market had price cuts as of April 24, below 2019 levels. In addition, due to the lack of inventory of second-hand homes, there is a flood of buyers considering new homes. As a result of new demand, builders are cutting incentives.
For example, 30% of builders lowered home prices in April, down from 31% in March and February and 35% in December. The average price drop in April was 6%, down from 8% in December.
“This shows both the face of sellers being unable or unwilling to list their homes due to low interest rates, and the buyers facing these affordability challenges,” said Bachaud. “Both sides are leading to lower sales numbers, and affordability is really the factor that is staying there. It will make the biggest impact.”
Gabriella is a Personal Finance Reporter at Yahoo Finance. follow her on her twitter @__gabriellacruz.
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