With fall just around the corner, a new housing season is approaching. Today, UrbanTurf looks at what we think will be the metrics that will determine the direction of the DC-area market in the coming months.
The direction that interest rates take in the coming months will perhaps single-handedly influence the direction of housing markets across the country. This week, 30-year mortgage rates approached 6% for the first time in 14 years, and rates have increased nearly 300 basis points compared to a year ago. If those increases continue into the fall, a number of buyers are going to sit on the sidelines.
For years in the DC-area housing market, the story has been the extremely low supply of homes for sale. However, since the beginning of the year, that narrative has begun to change. As the chart above illustrates, inventory has progressively risen each month this year.
From Bright MLS economist Lisa Sturtevant:
“I think inventory is the most important stat to be watching. Mortgage rates are likely going to settle into the mid- to-high five’s for the rest of the year. Buyers are starting to reset their expectations about rates. If inventory expands significantly, buyers will see more options which will draw them into the market.”
If the home price increases that have been so common in the region continue to ease as they have over the last four months, it may help offset the effect of rising interest rates. Price slashing is already occurring in many Mid-Atlantic markets including the DC area. Per Bright MLS, in the past four weeks, 50% of home sellers in the Bright MLS footprint have adjusted price expectations to deal with the current market conditions.
This article originally published at https://dc.urbanturf.com/articles/blog/the-3-charts-that-could-define-the-fall-housing-market-in-dc/20057.
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