As the Federal Reserve continues to march forward with rate increases aimed at countering inflation, the path for mortgage rates is less well-defined. This week’s interest rate hike actually did not see a corresponding rise in mortgage rates. But previous rate hikes did bring mortgage rates to the highest levels we have seen in years and it is these higher mortgage rates that are a primary factor slowing demand for home purchases. We are starting to see much more inventory coming on here North of Boston which is allowing for the demand to come down. The national housing market is now slowing down with home sales down 14% in June, and that trend is on pace to continue through July. Home price appreciation has also begun to slow. Over the next several months, the housing market will be even more in line with pre-pandemic market conditions. In otherwards, normalization of the housing market has begun.
Buyers who have been waiting on the sidelines may see an opportunity to get back into the market as things normalize a bit and volatility wanes. While it may take years to play out, the Fed has made it clear that they will continue taking the necessary action to bring down inflation. The market has largely adjusted to this dynamic already. We’ve reached a new normal, and it looks very different from the frenzied activity of the past two years, but that’s not a bad thing, especially for buyers.
As the housing market continues to normalize it is good for both buyers and sellers to understand the state of the market so expectations can be adjusted. Sellers will most likely not receive crazy over asking price offers and offers with contingencies (both inspection and finance) will become normal again. As a buyer you should know that the demand is not as it was during the pandemic period and offers do not need to do be aggressively over asking in most situations. The Farrelly Group can help guide you through this market shift. Call us today (978)664-3700.