There has been a lot of demand to buy a new home since Mortgage rates have been near record lows for most of the year. However, pending home sales in June were down 1.9% from May, according to the National Association of Realtors. And that could be a sign that the housing market is finally calming down.
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Will buyers soon enjoy lower property prices?
Pending home sales refer to sales contracts to buy a home that have been signed but pending, and are a measure of the strength of the housing market. Home prices are at record highs at this point, but that has been a deterrent for many buyers.
In May, Home prices rose 17% compared to May, according to the S&P Case-Shiller national house price index. This represents the largest annual gain on record and could explain why pending home sales fell last month.
Of course, the low real estate portfolio was also an issue. In fact, a major reason home prices have spiked this year is that there weren’t enough properties for buyers to choose from. So what happened is that buyers came to terms with the same limited homes and tried to do so outbid each other, and driving up home prices.
Now Realtor.com reports that the number of newly listed properties in June increased by 5.5% compared to June 2020. Overall, however, the population is still well below the normal level. And that makes it a very difficult market for today’s buyers to find their way around.
Should You Buy a House Now?
With current home prices and market competition, now is not an ideal time to buy, even if mortgage rates are so competitive. But if inventory slowly increases and buyers become more conservative about how much to pay for a home, things could improve later in the year.
If you have a compelling reason buy a house now – let’s say your lease is about to expire and you don’t want to extend it for another year – then you might want to continue looking for an apartment. Otherwise, it might be worth it to sit tight for a while.
There is a great chance that Mortgage rates remain competitive until 2022 and possibly beyond. In other words, if you step away from today’s tough housing market and wait and see, you won’t necessarily miss the chance of setting a competitive home loan interest rate. What you can do, however, is to save yourself a world of stress and avoid overpaying for a home that would normally be sold for much less.
Additionally, waiting for more inventory to hit the market means less likely to settle for a house that you aren’t really in love with. That alone makes the wait worthwhile.