Inflation is up to a 40-year high, and more gains are expected after the Federal Reserve upped its ante in May and June to rapidly cool an overheated market. As the Fed actively works to combat inflation, housing affordability is hurting, and buyers long outpriced and bogged down by tight competition are finally throwing in the towel.
While current buying conditions certainly seem bleak for those still house hunting, a slowdown in home sales is precisely on par with market expectations. As a result, home price growth is beginning to soften and sellers are slashing their asking prices, while for-sale homes are remaining on the market for an extended period of time compared to mid-pandemic peaks.
While they remain low by historical standards, for-sale inventory levels have risen. A slower pace of sales has resulted in more homes staying on the market for longer. New listing activity continues to lag behind recent years.
It’s important to remember that while mortgage rates are certainly not the only reason why homeowners decide to move, they do factor into the equation, and for some potential movers, the prospect of giving up their current mortgage and taking on one with a rate that is nearly double their current one is enough to back out of the transaction.