Mortgage rates have been falling steadily throughout 2019, but homebuyers don’t seem to be taking the bait.
MarketWatch reports that 2019 has seen slowing home price appreciation, positive consumer sentiment, and continually falling mortgage rates, conditions that in the past have spurred buyers to act. But that doesn’t seem to be the case: The number of pending home sales fell for the 16th consecutive month in April.
Interest rates are just one piece of the puzzle for move-up buyers, those who already own a home and are looking to buy a larger or otherwise more expensive property. While the pace of price appreciation has slowed, home prices are nevertheless at all-time highs across many housing markets nationwide, offsetting the savings a move-up buyer could expect thanks to today’s interest rates. (Not to mention that many of today’s homeowners who bought their homes after the housing crisis have even lower mortgage rates than what’s on offer today.)
Making affordability matters worse, inventory remains quite constrained except at the luxury end of the market. As a result, move-up buyers have few options of properties to move to and will face more competition for homes, which can raise prices.