We’re over halfway through 2018, which means the real estate trends for this year are becoming clear. While no one knows for sure what the future will hold, reviewing what we’ve seen happen so far can help buyers understand what to expect when they put in an offer on a potential home.
Lower Inventory = Fewer Sales
One of the most obvious trends for 2018 has been a decline in the number of homes sold. According to the National Association of Realtors (NAR), May existing home sales were down slightly from April, and down three percent compared to May 2017.
What may be less obvious is why sales are trending this way. Rather than a lack of demand, it’s actually a lack of supply that’s pulling the numbers down. NAR reported just 4.1 months of inventory for May 2018, a continuation of past reports showing less than six months of inventory – considered a balanced market – is benefiting sellers.
Rising Prices, Rising Interest Rates
One result of reduced inventory has been an increase in the price of homes. The median sales price was up nearly five percent over last year, reaching $264,800, in NAR’s latest statistics.
We’ve also seen that a healthy and stable economy is contributing to rising interest rates. In June, the Federal Reserve raised the federal funds rate for the second time this year and indicated two additional increases were likely before the end of 2018. Note that historically speaking, mortgage rates remain low, so carefully consider the risk if you plan to wait.
A Challenge For First-Time Home Buyers
It appears that the combination of low inventory, increasing prices and escalating interest rates may be hitting first-time buyers the hardest. New buyers made up a smaller percentage of the market than in 2017, and starter homes were among the most impacted by the price climb.
As we move into the second-half of 2018 and look toward 2019, there is a critical step to consider if a home purchase is on your horizon. With competition for homes high, having your mortgage financing in order can be a real difference maker. This strategy will allow you to make the strongest possible offer and could set you apart from the others.
If you’re ready for help finding your way in the current real estate market, call me to get started with an Open Mortgage specialist today.