The current housing market in the US is a crucial area of interest for every prospective home buyer. Let’s dive into the available housing market statistics to gain a comprehensive understanding of the current trends and dynamics.
These statistics will help determine the right timing of entering into the home buying market.
The median home price in the United States is currently $402,600, up 2.4% from last year. However, home prices have been slowing down in recent months, and some experts predict that they could start to decline in the coming months.
The 2.4% year-over-year increase in home prices in the United States is the smallest annual increase since January 2021. This slowdown is being driven by several factors, including:
- Rising Mortgage Rates:
Mortgage rates have been rising steadily in recent months, and are now at their highest level in over a decade. This is making it more expensive for people to buy homes, and is contributing to the slowdown in home sales.
- Slowing Economic Growth:
The US economy is growing at a slower pace than it was a few months ago, and this is also contributing to the slowdown in home prices.
- Rising Inflation:
Inflation is at a 40-year high, and this is making it more expensive for people to afford everything, including homes.
- Rising Inventory:
The number of homes for sale is starting to increase, which is also putting downward pressure on home prices.
Some experts believe that home prices could start to decline in the coming months, but others believe that the slowdown will be temporary. It is still too early to say for sure what will happen to home prices in the future.
Mortgage rates are currently at 6.8%, up from 3.2% a year ago. The increase in mortgage rates is making it more expensive for people to buy homes, and is contributing to the slowdown in home sales.
The Federal Reserve is expected to continue raising interest rates to combat inflation. This means that mortgage rates are likely to remain high in the near future. However, it is impossible to say for sure what will happen to mortgage rates in the long term.
Here are some factors that could affect mortgage rates in the future:
- The Pace of Inflation:
If inflation continues to rise, the Federal Reserve may be forced to raise interest rates even higher. This would put even more upward pressure on mortgage rates.
- The State of the Economy:
If the economy slows down, the Federal Reserve may be less likely to raise interest rates. This could lead to a decline in mortgage rates.
- The Supply and Demand for Housing:
If the supply of homes for sale increases, this could put downward pressure on home prices and mortgage rates.
- Investor Sentiment:
If investors become more risk-averse, they may be less likely to invest in mortgage-backed securities. This could lead to higher mortgage rates.
It is important to keep in mind that the future of mortgage rates is uncertain. However, it is important to be aware of the factors that could affect them so that you can make informed decisions about your home-buying plans.
The housing supply is also down, which is making it even more difficult for buyers to find homes. The number of homes for sale is down 18.1% from last year.
The housing supply is down for several reasons, including:
- The Pandemic:
The pandemic caused many people to delay their home-buying plans, which led to a decrease in the supply of homes for sale.
- Rising Prices:
The rising cost of homes has made it more difficult for some people to afford to buy a home, which has also contributed to the decrease in supply.
- Investor Demand:
Investors have been buying up homes, which has also reduced the supply available to homebuyers.
- Construction Delays:
The ongoing supply chain disruptions and labor shortages have slowed down the construction of new homes, which has also contributed to the decrease in supply.
The low housing supply is making it more difficult for buyers to find homes, and is contributing to the rising prices. It is also making it more difficult for first-time homebuyers to enter the market.
Months of Supply
The months of supply is a measure of how long it would take to sell all of the homes on the market at the current sales pace. The months of supply is currently at 2, which is considered to be a seller’s market.
Months of supply (MoS) is a measure of the number of months it would take to sell all of the homes on the market at the current sales pace. It is calculated by dividing the number of homes for sale by the number of homes sold in the past month.
- A MoS of 2
means that there are two months of inventory on the market. This is considered to be a seller’s market, as there are more buyers than sellers. This means that homes are likely to sell quickly and for more than the asking price.
- A MoS of 6
is considered to be a balanced market, as there are an equal number of buyers and sellers. This means that homes are likely to sell in a reasonable amount of time and for a fair price.
- A MoS of 12
or more is considered to be a buyer’s market, as there are more sellers than buyers. This means that homes may take longer to sell and may sell for less than the asking price.
The MoS can vary from market to market and can change over time. It is important to keep an eye on the MoS when you are thinking about buying a home, as it can give you an idea of how competitive the market is.
Here are some other things to keep in mind about the MoS:
- The MoS is just one measure of the housing market. It is important to consider other factors, such as home prices and mortgage rates, when making a decision about whether to buy a home.
- The MoS can be misleading in some cases. For example, if there is a sudden influx of new homes on the market, the MoS may temporarily increase, even if the underlying demand for homes is still strong.
- The MoS is not always accurate. It is based on estimates and can be affected by factors such as seasonal trends and data collection errors.
Overall, the MoS is a useful tool for understanding the housing market. However, it is important to use it in conjunction with other factors when making a decision about whether to buy a home.
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Getting Into the Market
As a home buyer eager to dive into the current housing market, here are several steps you need to take:
- Understand Your Financial Capability:
Assess your financial status by evaluating your savings, income, and current debts. This comprehensive review will enable you to determine your affordability.
- Check Your Credit Score:
A good credit score can secure better mortgage rates. If your score is low, consider delaying your purchase while you improve it.
- Get Pre-approved for a Mortgage:
This gives you an idea of how much a lender is willing to lend you and shows sellers that you’re a serious buyer.
- Work with a Real Estate Agent:
An experienced agent can guide you through the process, negotiate on your behalf, and help you find properties within your budget.
- Research the Market:
Use housing market statistics to understand the state of the market. This can help you decide when to buy and identify potential areas of interest.
- Prepare for Possible Bidding Wars:
In a seller’s market, be ready for potential bidding wars. Have a clear limit on how much you’re willing to spend.
- Home Inspection:
Once you’ve chosen a home, have it inspected to find any potential problems that could lead to costly repairs.
Remember, buying a home is a significant decision. Take your time, do your research, and don’t rush into anything.
Understanding the current housing market statistics is instrumental in making informed decisions about buying a home. As the market continues to evolve, staying updated with the latest trends can significantly enhance your home-buying experience.
Image Credit: understanding the current housing market by envato.com
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