What To Know as the Housing Market Shifts due to Mortgage Rate Cuts

As Fall Approaches, Homebuyers Prepare for Mortgage Rate Decrease: Important Factors to Consider in the Changing Housing Market

As fall approaches, homebuyers are getting ready to start their house-hunting journey and are hopeful for a drop in mortgage rates. Last October, rates reached a 23-year high of 7.79% for a 30-year fixed home loan, as reported by Freddie Mac. However, rates have since decreased to 6.47% for the week ending Aug. 8, marking the lowest they have been in over a year.

Mortgage Rates Expected to Decline Slowly

Despite the decrease in mortgage rates since their peak in October 2023, they are still significantly higher than the lows of around 3% seen in 2022. This means that the volatility in rates continues. The recent drop is primarily attributed to signs of easing inflation and indications that the Federal Reserve will soon lower the federal funds target rate. The Federal Reserve had been raising interest rates since early 2022 to combat inflation but now plans to reduce rates in response to moderating inflation.

Lower Rates May Drive Increase in Housing Inventory

Although housing inventory remains below pre-pandemic levels in many areas of the U.S., there are more homes for sale compared to the same period last year. Realtor.com predicts an annual increase of 14.5% in housing stock for 2024. This rise in inventory, combined with lower rates, presents opportunities for potential buyers.

Getting Pre-approved for a Mortgage Should Be a Priority

To stay ahead in the competitive housing market, it is crucial for homebuyers to get pre-approved for a mortgage. Being pre-approved will enable buyers to act quickly when the perfect home becomes available. Planning ahead and securing buying power early on can give homebuyers an advantage over others who are still in the preparation stage. If you find a home you love, don't hesitate to make an offer.
In summary, homebuyers gearing up for fall should expect a possible decline in mortgage rates. While rates are anticipated to decrease gradually, competition in the housing market may intensify, underscoring the importance of strategic action. Being pre-approved for a mortgage and prepared to make swift, competitive offers can help buyers capitalize on reduced rates and potentially secure their ideal home at a lower cost.

Contact OsvAna Realty today to get prepared to secure your dream home before it's too late.