adminThe U.S. housing market has become unaffordable for many aspiring homeowners, priced out by either high home prices or high mortgage rates.
With mortgage rates at a 23-year high and home prices not falling substantially, affordability hit a 38-year low in September.
Yet with this backdrop, “all hope is not lost for people who want to buy a home soon,” Redfin
RDFN,
said in a recent report.
The real-estate brokerage said two key elements of the housing market could offer an opportunity — rising inventory and volatility in mortgage rates.
New listings rose 2% since the start of September, the company said, offering a glimmer of hope that more homeowners are putting their properties on the market, Redfin said.
Even though the uptick is small, it’s still a positive sign, Chen Zhao, economic research lead at Redfin, told MarketWatch. “Inventory is certainly not getting worse and there are some signs that maybe it could even get a little bit better,” she said. “And over time, people get more used to these high rates.”
“‘Inventory is certainly not getting worse and there are some signs that maybe it could even get a little bit better. And over time, people get more used to these high rates.’”
Even a “slow trickle of supply” is helpful for buyers, she added.
Rates are also taking big swings as the market tries to digest information on whether the U.S. Federal Reserve will hike interest rates at its next policy meeting, which will be held from Oct. 31 to Nov. 1.
“Even just this past week we saw kind of a big pullback and mortgage rates where they came down about 20 basis points or so,” Zhao said, reacting to speeches by Fed officials, and geopolitical conflict between Israel and Gaza.
The 30-year mortgage reached 7.81% on Oct. 6, but has since fallen to 7.6% as of Oct. 11, according to Mortgage News Daily. “For buyers, if you’re really paying attention, sometimes you do get these small amounts of volatility, and that might give you enough of an opening to jump in,” Zhao added.
But the market remains challenging. Across the U.S., 99% of counties were less affordable in the third quarter than their historical average, according to data from Attom, a real-estate data analytics company. Home prices are also outpacing wage gains in many big cities.
While a big price decline in home prices is unlikely, there is reason for optimism. “We also don’t really expect them to go up a lot just given where interest rates are,” Zhao added.
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