If you’ve been searching for a home all spring and summer without success, it might be time to stay alert in the coming weeks. The national housing market has entered neutral territory, giving buyers and sellers equal opportunities as mortgage rates decline and price increases slow. With home price growth easing, sales slowing down and inventory levels rising, buyers should watch for properties that have been on the market for several weeks or those with price reductions. Sellers are also becoming more open to offering concessions, such as covering closing costs, which can help reduce monthly mortgage payments. For those waiting on the sidelines, early fall might be the “sweet spot” due to less buyer competition, more motivated sellers and lower interest rates.
However, mortgage rates remain unpredictable and may rise again. Olsen notes that local market conditions differ, so for those with financing and feeling secure in their job situation, now could be the best time to enter the market.
Increased Negotiation Power
The housing market saw less competition this year, with sales slowing down and more homes available compared to last summer. In July, the number of homes for sale was nearly 25% higher than last year. Although homes are selling quickly, buyers now have more time to consider their options. On average, homes stayed on the market 11 days longer than last year.
This softer demand, primarily driven by affordability challenges, has led to more price reductions—over a quarter of sellers in July lowered their prices. Many sellers still price their homes too high, which explains why some homes remain unsold for extended periods.
Slower Home Price Growth
Home values are still rising but at a much slower rate. In July, home price growth was nearly flat, at just 0.5% annualized. This deceleration may give buyers more flexibility in planning their purchase budgets.
Fluctuating Mortgage Rates
While the Federal Reserve expects to lower its key rate soon, current mortgage rates may reflect these expectations. After dropping to 6.4% on Aug. 1, 2024, mortgage rates climbed back to 6.63% a week later. Buyers should act fast and secure a mortgage rate since rates are volatile and difficult to predict. Waiting too long for rate cuts could lead to renewed competition.
Seasonal Slowdown Expected
The market typically slows in the fall, resulting in fewer new listings. Although inventory will likely continue increasing, the growth rate will taper off. The slower pace of new listings could reduce the likelihood of significant price cuts, as substantial inventory increases are necessary to prompt significant price declines.
Local Market Variations
Although the national market has reached a balance between buyers and sellers, local markets vary. Some areas are more favorable for buyers, particularly in Florida and Texas, while the Northeast still sees strong seller demand.
Markets Favoring Buyers
In July, 11 markets gave buyers an advantage, with most in Florida, such as Cape Coral and Miami. Other buyer-friendly markets include McAllen, Texas, and New Orleans, La.
Hottest Seller Markets
Northeastern metros like Rochester, N.Y., and Syracuse, N.Y., remain strong seller markets, alongside cities like San Francisco, Calif., and Boston, Mass.
Bottom Line
Despite current challenges, this season presents an excellent opportunity to secure a deal. Reduced demand from other buyers may outweigh the scarcity of new listings. Buyers who know what they want and stay informed about market trends can gain leverage and secure better negotiation terms.
Understanding how the market fluctuates is essential when considering a home purchase. Buyers should work closely with their agents to identify favorable opportunities.
