A Window of Opportunity for Homebuyers

The housing market has clearly been impacted by the fact that mortgage rates are significantly higher now than they were at the beginning of the year. As a result, buyer demand and property sales are returning to a range similar to those seen before to the pandemic.

However, the return to pre-pandemic levels is not a terrible thing. The property market really experienced some of its finest years in the years prior to the pandemic. To demonstrate how the current housing market is still robust as the market goes through this transition, it is crucial to contrast today with previous normal years rather than the abnormal pandemic years.

Higher Mortgage Rates Are Moderating the Housing Market 

According to agents and brokers, the ShowingTime Showing Index monitors the volume of house showings. It's also a reliable indicator of changing consumer demand. Take a look at their data starting in 2017 in the graph below:

Here’s a breakdown of the story this data tells:

• The 2017 through early 2020 numbers (shown in gray) give a good baseline of pre-pandemic demand. The steady up and down trends seen in each of these years show typical seasonality in the market.
• The blue on the graph represents the pandemic years. The height of those blue bars indicates home showings skyrocketed during the pandemic.
• The most recent data (shown in green), indicates buyer demand is moderating back toward more pre-pandemic levels.

This demonstrates that consumer demand is declining from levels witnessed over the previous two years and that the real estate boom is slowing down due to increasing borrowing rates. Because there is more inventory available, purchasing your future house should be easier for you than it would have been during the pandemic.

Higher Mortgage Rates Slow the Once Frenzied Pace of Home Sales

This year, other changes also started to happen as mortgage rates started to rise. Another illustration is the slowing rate of home sales. Here is a look of existing house sales dating all the way back to 2017 using information from the National Association of Realtors (NAR). A similar pattern to the preceding graph can be seen in the graph below:


Again, the data paints a picture of the shift:

• The pre-pandemic years (shown in gray) establish a baseline of the number of existing home sales in more typical years.
• The pandemic years (shown in blue) exceeded the level of sales seen in previous years. That’s largely because low mortgage rates during that time spurred buyer demand and home sales to new heights.
• This year (shown in green), the market is feeling the impact of higher mortgage rates and that’s moderating buyer demand (and by extension home sales). That’s why the expectation for home sales this year is closer to what the market saw in 2018-2019.

Why Is All of This Good News for You?

Both of those elements have created a window of opportunity for people trying to buy a property and for homeowners looking to move. Housing inventory is able to increase when demand moderates and the rate of home sales lowers, giving you more options for your home search.

Therefore, don't be alarmed by stories that the market is slowing down or stabilizing. The housing market is still robust; it's only starting to cool off from the uncontrollable frenzy it experienced during the height of the pandemic. This is good news. It gives you fresh possibilities to locate a residence that satisfies your wants.
 

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