Thom and Rory share stats, articles, and graphs that may make you change your mind.
Are you waiting to buy a home until prices drop? Not sure of your next move? Are you concerned about buying in a hot market or is now even a good time to buy? As 2021 progresses, questions about what’s coming are top of mind for buyers and sellers. Near record-low mortgage rates along with rising home prices started off 2021 with a robust housing market in the first half of the year, but what does the forecast tell us about what’s coming for the 2nd half of 2021 and forward?
Mortgage Rates Will Likely Increase, but Remain Low
Many experts are projecting a rise in interest rates. Freddie Mac’s latest quarterly forecast is that mortgage rates will continue to rise through the end of next year estimate that the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, rising to 3.8% in the fourth quarter of 2022.
However, even as mortgage rates rise, their anticipated increase is expected to be modest, and well below historical averages, thus allowing homebuyers to maximize their purchasing power. Home Price Appreciation Will continue but Price Growth Will Likely Slow.
Joe Seydl, Senior Markets Economist at J.P. Morgan, also projects home prices will continue to rise, so buyers interested in purchasing a home should do so sooner rather than later. Waiting to buy a home or waiting for rates or home prices to fall may not be in their best interest: Other experts remain optimistic about home prices, too. The graph below highlights 2021 home price forecasts from multiple industry leaders:
Are you waiting to buy a home until prices drop?
Inventory Is Still A Challenge
There Are Reasons To Be Optimistic
Home prices are rising, but they should moderate as more homes come to market. George Ratiu, Senior Economist at realtor.com, says there are signs that indicate the current inventory challenges may lessen, thus slowing the rapid home price appreciation and generating more choices for buyers. He also says there have been more new listings this year compared with 2020 in 11 of the last 13 weeks with an influx of new sellers over the last couple of months.
New construction home starts are also starting to improve, which further supports hopes of more options coming to market. Robert Dietz, Chief Economist at the National Association of Home Builders (NAHB) says there are now 652,000 single-family homes under construction. This is 28% higher than a year ago.
Finally, while it may not change the current housing market we’re experiencing, more homes might come to market this year thus improving the economy according to Mark Fleming, Chief Economist at First American, who also notes that growing consumer confidence, a stronger labor market, and higher wages have potential for housing demand. While a growing economy and improving conditions with the pandemic may also motivate existing owners who were on the sidelines, to list their homes for sale, yet not enough to tilt it from a super sellers’ market anytime soon.
Bottom Line: As we look at the forecast for prices, interest rates, inventory, and home sales, experts remain optimistic about what’s on the horizon for the second half of 2021. But again, if you are waiting to buy a home, it’s currently looking like it would be better to buy sooner than later. Let’s connect today to discuss how we can navigate the market together in the coming months.
The information contained, and the opinions expressed, in this article are not intended to be construed as
investment advice. The Thom and Rory Team does not guarantee or warrant the accuracy or completeness of the
information or opinions contained herein. Nothing herein should be construed as investment advice. You should
always conduct your own research and due diligence and obtain professional advice before making any investment
decision.