Fall housing outlook: Cooling prices, tighter inventory, less competition
As the weather cools, so too will competition and housing prices, experts told Inman for its 2021 Fall Housing Market Outlook. Still, agents can expect inventory to remain tight.
Home price growth is slowing and buyers are a bit less frantic than earlier this year. Interest rates will likely remain low for the near future, and unfortunately, inventory will probably remain pretty tight as well. All that is to say, this fall will be business as usual for most agents.
“I think that this fall won’t throw too many surprises our way,” Daryl Fairweather, Redfin’s chief economist, told Inman. “We can expect mortgage rates to stay pretty stable and for demand and supply to follow pretty much a normal seasonal pattern.”
Home price growth is peaking
Annual home price growth in the U.S. has surged over the last year or so, and is continuing to set records. Annual appreciation was up 17.7 percent year over year in August, according to a recent report from Zillow.
However, month over month growth is finally showing signs of cooling. For the first time since January, home price appreciation actually slowed in August from the previous month, just appreciating 1.75 percent from July, in contrast to the 1.97 percent growth seen between June and July.
“If you look at any of our monthly reports, pretty much for most of this year, every month we’ve been saying, ‘record-high home price appreciation,'” Nicole Bachaud, an economic data analyst at Zillow, told Inman. “Every single month, it’s like new record, new record. So we are finally coming up to what we think is the peak.”
Not that home prices will come crashing down at any time soon — but growth may finally be gearing back toward normal levels again.
“It’s just that [prices are] going to rise less quickly than they are right now,” Bachaud added. “It’s moderation slowly back towards normal.”
Mortgage rates will hold steady
Robert Heck, vice president of mortgage at online mortgage broker Morty, told Inman that mortgage rates should remain relatively low into the fall and for the foreseeable future.
“Looking forward to fall, most people are expecting things to loosen up and become a bit more transactional friendly on both the real estate side of things as well as the mortgage rate [side],” Heck said. “From a rate perspective, I don’t really expect things to change all that much, given everything that’s going on.”
The continuing threat of COVID-19 variants paired with simmering fears of inflation are two primary factors that Heck said will keep rates low for the time being. “The Federal Reserve has been pretty open about keeping [rates] accommodating to the extent that they can,” he added.
Inventory will mostly remain low
The number of seasonally adjusted new listings declined 6 percent in August from the previous year, the first time since February this figure saw a decrease, according to a Redfin report.
Market competition will become less heated
Some agents Inman spoke with were hesitant to go as far as to say the market is becoming “easy” for buyers moving into fall, but the buyer competition is definitely cooling and will likely continue to do so.
By: Inman News, 9/23/21
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