The Summer slowdown is dragging on, and it’s starting to feel like this will continue for the rest of the year. There was a slight pop in activity after the Fed announcement. However, that lasted about a week, and now it feels like summer again. This is the first time all year that prices have decreased MoM in consecutive months, and based on the sentiment in the market right now, prices might continue to come down.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|---|---|---|
|
Homes for Sale |
+28% |
FLAT |
|
New Listings |
+17% |
+3% |
|
Homes in Escrow |
+5% |
-11% |
|
Closed Sales |
+1% |
-15% |
|
Median Sale Price |
+2% |
-2% |
With more inventory on the market and a second consecutive month of declining sales and prices MoM, it’s starting to feel like a buyer’s market. It’s not across the board, and I don’t expect it to be, but there could be some good deals out there for savvy buyers.
A Weird Time in the Market
You would expect with rising inventory and rates, easily the lowest they’ve been all year, would stimulate the market. Well, it has, in some regard, with more sellers putting their homes on the market. However, it appears buyers aren’t feeling the same way. The market is continuing to feel lackluster. There’s no real urgency from buyers, as they seem to be taking the wait-and-see approach. The good homes in good locations that are priced well are still selling like they have all year, but it’s nothing crazy. I’m seeing a decent amount of homes sell below the asking price and possibly the most I’ve seen all year. It’s not a great time to be a seller, with only one month left before most buyers in the market, are the ones looking for deals.
Interest Rates
As expected, the Fed dropped the Fed Funds Rate a couple of weeks ago. However, they did surprise most by cutting them by 50 basis points instead of 25. What came as a bigger surprise to many people is that mortgage rates have increased since then. As I have mentioned before, mortgage rates don’t always drop after a Fed announcement. It depends on the bond market and how much of the Fed cut is already priced in. And this was a prime example of that. In addition, the jobs report on Friday far exceeded expectations. This is good news for the economy and implies we might have avoided a recession. However, it was terrible news for mortgage rates. And since Friday, rates have increased by about 0.35%. Economists are still anticipating that mortgage rates will be lower by the end of the year but more gradual than expected.
So Much Going On
We have the lowest mortgage rates and close to the most inventory we’ve had all year, which are both great. However, we also have an election in a few weeks, multiple wars, economic uncertainty, and the holiday season just around the corner. It feels like it’s too much for buyers to think about, and they remain on the sidelines. Maybe after the election, buyers will have one last crack before the holidays, or perhaps they won’t. It’s been an impossible year to predict, and right now, it’s harder than ever to know what will happen next.
