Are Home Prices Rising or Falling?

The housing market needed a break and the Federal Reserve delivered it at their latest FOMC meeting in early November.  The central bank's decision to hold its fed funds rate steady brought mortgage rates down to the lowest level since late September.  With job growth slowing and consumers feeling less confident, rates may see more improvement in the coming weeks and the market could see a boost in sales at the end of the year if a declining trend in rates is materialized.  

Winter is generally a slow season for the real estate sector but will it stay frozen or thaw out - and more importantly will home prices keep rising or fall?  Home prices and mortgage rates showed few signs of falling at the end of October, as low inventory spurs competition among home buyers.  Home buying demand is also drying up as many aspiring homeowners have decided purchasing a home is simply unaffordable.  

Marketwatch interviewed a variety of economists on what they expect through the end of the year and into 2024.  Wall Street bank Goldman Sachs expects home prices to fall for the rest of the year due to high mortgage rates and low inventory.  "While the sharpest declines in housing activity and prices are now behind us, the recent jump in mortgage rates and the prospect that they are likely to remain elevated for the foreseeable future present headwinds to the economy's most interest rate sensitive sector," the Wall Street bank's analysts wrote in an Oct. 22nd note.  The bank expects home prices to fall 0.8% through December 2023 but prices will have risen by 3.4% in 2023, as compared to the year before.  And in 2024, the bank expects home prices to grow by only 1.3%, as supply remains tight but high rates weigh on affordability.  

With the average 30-year fixed-rate mortgage remaining around 7-7.25% in early November, an increasing number of homebuyers opted to use adjustable-rate mortgages (ARMs) to finance their home loans, according to the latest weekly survey released by Mortgage Bankers Association.  ARMs are generally considered riskier loans as their rates are fixed for shorter terms but also offer more savings immediately as many borrowers are anticipating rates to decrease at which point they will refinance.  

Bottomline is affordability is a major topic of discussion but many are finding solutions to purchase a home today.  Call me at 858-220-6412 so we can discuss your plans to buy or sell a home in this ever changing market.