National Association of Realtors chief economist, Lawrence Yun, said This Week in Real Estate that he expects mortgage rates to be about 4.5% to 5% for the remainder of the year. Dr. Yun further forecasts about a 7% reduction in home sales compared to 2021. It should be noted that the 6.12 million existing home sales in 2021 was the highest level since 2006. Below are a few newsworthy events from the fourth week of March that influence our business:
Pending Home Sales Dwindle 4.1% in February. The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, waned 4.1% to 104.9 in February. Year-over-year, transactions dropped 5.4%. “Pending transactions diminished in February mainly due to the low number of homes for sale,” said Lawrence Yun, NAR’s chief economist. “Buyer demand is still intense, but it’s as simple as ‘one cannot buy what is not for sale.’” “It is still an extremely competitive market, but fast-changing conditions regarding affordability are ahead,” he said. “Consequently, home sellers cannot simply bump up prices in the upcoming months, but need to assess the changing market conditions to attract buyers.” As of February 2022, higher mortgage rates and sustained price appreciation has led to a year-over-year increase of 28% in mortgage payments. Yun forecasts mortgage rates to be about 4.5% to 5% for the remainder of the year and expects about a 7% reduction in home sales in 2022 compared to 2021. “Home prices themselves are still on solid ground,” he added. “They may rise around 5% by year’s end and we should see much softer gains in the second half of the year.”
Mortgage Rate Soars Closer To 5% In Its Second Huge Jump This Week. The average rate on the 30-year fixed mortgage shot significantly higher Friday, rising 24 basis points to 4.95%, according to Mortgage News Daily. It is now 164 basis points higher than it was one year ago. Potential buyers are already facing extraordinarily tight supply and sky-high prices. With both rates and prices considerably higher, the median mortgage payment is now more than 20% higher than it was a year ago. Buyers are also facing inflation on everything else in their budgets, which exacerbates the affordability issues. Lawrence Yun, chief economist for the National Association of Realtors, said Tuesday that he expects the rate to hover around 4.5% this year, after previously predicting it would stay at 4%. NAR’s latest official prediction is for sales to drop 3% in 2022, but Yun now says he expects they will fall 6% to 8%.
What You Can Expect From The Spring Housing Market. While there are multiple factors causing some uncertainty, including the conflict overseas, rising inflation, and the first rate increase from the – the housing market seems to be relatively immune. in over three years reports the 30-year fixed mortgage rate has increased by more than a full point in the past six months. And despite some mild fluctuation in recent weeks, experts believe rates will continue to edge up over the next 90 days. There may be some relief coming for buyers searching for a home to purchase. Realtor.com recently reported that the number of newly listed homes has grown for each of the last two months. Also, the (NAR) just announced the months’ supply of inventory increased for the first time in eight months. Prices are always determined by supply and demand. Though the number of homes entering the market is increasing, buyer demand remains very strong. With the demand for housing still outpacing supply, home prices will continue to appreciate. Many experts believe the level of appreciation will decelerate from the high double-digit levels we’ve seen over the last two years. That means prices will continue to climb, just at a more moderate pace. Most experts are predicting home prices will not depreciate.
Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest Real Estate and Berkshire Hathaway HomeServices Real Estate Professionals is eligible to receive no-obligation home warranty coverage from American Home Shield the first six months the home is listed with our company?