Often pegged as the “slow season” in real estate, winter may be an optimal time for you to enter the housing market or sell your home and buy again. See what mortgage rates, home prices, homebuyer traffic and home inventory are doing to shape the winter housing market.
Mortgage rates are still moving upward.
As of the week ending December 1, the 30-year fixed average mortgage rate had increased for five straight weeks to levels not seen in over a year, according to Freddie Mac.
Last December the Federal Reserve voted to raise its target federal funds rate, marking the first increase in nearly a decade. For the Fed’s meeting this December, CME’s FedWatch puts the probability of another rate hike at 95 percent. Though the federal funds rate does not directly impact mortgage rates, gradual increases can typically be expected.
Existing home supply is still an issue.
Existing home sales in October reached their highest level since February 2007. While that’s good for the housing market, it’s not so good if you’re actively searching for a home. Existing home supply fell 0.5 percent in October to a 4.3-monthly supply. A 6-month supply is considered a balanced market.
Though winter usually sees less homebuyer traffic, rising mortgage rates may continue to incite competitive markets where supply has dwindled.
Starter homes are a hot item.
According to an article by Fortune, if you’re looking to trade up to a larger home, now is the time do it. Between 2011 and 2016, the average price of a two-bedroom home climbed 59 percent nationwide. Four-bedroom homes increased by only 41 percent, in comparison.
New home inventory is up, prices down.
New home sales declined in October, allowing the supply of new homes to increase by 2.9 percent to 246,000, which is the strongest reading since September 2008. The supply index increased to 5.2 months and new home averages prices fell from September’s $364,100 to $354,900.
Home prices are now above pre-housing bubble levels.
According to CBS News, average home prices have reached 2008 levels thanks to immense price increases in 2016. According the Federal Housing Finance Agency House Price Index, home prices rose 6.1 percent from the third quarter of 2015 to the third quarter of 2016.
While a new report released by realtor.com® forecasts home price appreciation to slow to 3.9 percent in 2017, the rapid cost rise of homes coupled with increasing mortgage rates could quickly price some homebuyers out of the market.
Homes were still selling just as quickly mid-fall as they were in June.
According to the October Existing Home Sales report by the National Association of Realtors, existing homes that sold were on the market for an average of 41 days, down from 57 days a year ago. October data matches the reading from June, which was the shortest time frame since 2009.
Furthermore, a new Redfin study found that while spring is still the best time to list your home, winter came in second with 17.5 percent of homes selling above their listing price and 46.2 percent of homes off the market within 30 days.
If you’re thinking of purchasing your first home or selling and buying again in the near future, download our free Mortgage 101 Handbook for everything you need to know about the home financing process.