A combination of rising housing inventory and cooling mortgage rates as we begin to enter the slower homebuying months of the year may be giving consumers the clearest signal yet that it’s a great time to start their housing search. And while many eyes are on the Federal Reserve’s September meeting where the board is widely expected to cut rates, housing experts at Movoto believe the Fed rate cut is already priced into the current mortgage rates, giving further credence to that idea.
Homebuyers are starting to get back in the game, according to The National Association of Realtors’ Existing Home Sales report for the month of July. Existing-home sales increased 1.3% in July to a seasonally-adjusted annual rate of 3.95 million, which ended a four-month skid. And while some sales are still 2.5% behind last year’s July pace, it’s welcomed news that the velocity of sales is starting to turn around, creating potentially more turnover in a market that’s been scant in options for buyers.
Jerimiah Taylor, Movoto’s Chief Real Estate Officer
Affordability continues to be a concern, however, according to the same report. The median existing-home sales price increased 4.2% to $422,600, the 13 straight month of year-over-year price gains. While home prices typically cool towards the back half of the year due to seasonality, Jerimiah Taylor, the Chief Real Estate Officer at Movoto doesn’t believe homes are suddenly going to be sold at a discount.
“I wouldn’t expect any significant decrease,” Taylor said.
The market is starting to see more balance between velocity and inventory, with 4 months’ supply of inventory at the current sales pace, at the end of July. Unsold inventory reached 1.33 million at the end of July, a slight increase of 0.8% from the previous month.
Mortgage rates continue to be the hottest topic in the housing world. The average 30-year fixed-rate mortgage dropped to 6.49% on August 15, according to data from Freddie Mac.
“We’ve seen peak interest rates,” Taylor explained. “They peaked in October of 2023 at 7.9% and they’ve been on a slow grind down.”
“I think a lot of people are looking at the September Fed meeting thinking that there’s going to be a big stair step down in rates,” Taylor said. “The reality is that it’s already priced in.”
Taylor’s reasoning is that mortgage rates have moved even lower than the 10-year Treasury Yield, over the past month or so, which is typically an indicator by which mortgage companies will price rates.
“You’re getting disproportionate movement in mortgage rates which means the market is already starting to price in Fed cuts,” Taylor said. “I think the Fed cuts are not going to be the stair step that people are expecting in mortgage rates.”
All of those combined factors — lower mortgage rates, more inventory, and a healthier sales velocity — means right now is a great time for buyers to get into the market.
