A report by realtor.com details why the housing market is set to gain traction over the next few months.
"I don't think we'll get back all the way to...the frenzy we saw at the beginning of 2018," said realtor.com Chief Economist Danielle Hale. “But it's certainly a possibility that home sales and prices will pick up, especially if mortgage rates stay low."
One of the main reasons the market will begin to heat up is due to mortgage rates being below 4%. The report says low mortgage rates are a “big incentive” for people to buy before rates go back up.
Freddie Mac’s latest mortgage rate survey revealed the average rate for a 30-year fixed rate mortgage was 3.75% on July 3, which is a slight increase from the 3.73% rate the week prior. The average rate a year ago was 4.52%.
“We’re seeing a tug of war happen as the fixed income market flashes warning signs while the equities market continues to march higher with optimism,” Sam Khater, Freddie Mac’s Chief Economist, said. “The data suggests the economy is weakening but is still on very solid ground with high consumer confidence and a strong labor market. Closer to home, the housing market continues to slowly improve and gain momentum as we head into the second half of the year, which is good news and should keep the economy growing.”
Realtor.com also said that the number of homes for sale is expected to decline again over the next few months, according to Hale. Hale added that this is because the growth in inventory is starting to slow, slipping from 2.9% annual growth in May to 2.8% in June.
“We're not seeing as many new listings come up on the market," Hale said. That could be because homeowners looking to trade up to bigger, nicer residences can't find anything in their price range. It was only 18 months ago that the number of homes for sale hit its lowest level in recorded history and sparked the fiercest competition among buyers we've ever seen.”