Good News Finally For Homebuyers Amid A Volatile Housing Market

It's no secret that the housing market feels like a scary place right now. Many have lamented about the cost of rising home prices that make buying a home -– especially a first home -– feel like an impossible feat. There is no one cause of this problem, but rather multiple factors that have come together to create a volatile housing market. For example, there is a shortage of housing, and the scarcity of homes available is making the ones that are for sale be listed with a high price tag. In an interview with NPR, Chris Arnold states that not enough homes were built after the last housing crash, which is one factor leading to the scarcity.

This makes buying a home feel like a competition where the deepest pockets win. Many homes are selling for well above asking, receiving all-cash offers, no contingencies, or a combination of the three. The average homeowners, especially younger ones trying to enter the market, are having a difficult time trying to compete. Inflation isn't helping the housing cost either. The price of everyday items is up, often making it difficult to save for a home. Inflation is also contributing to homes' high price tags. But there might be some much-needed good news for those looking to buy a home. Some experts believe it might even make the housing market less volatile.

In exciting news to economists, mortgage application rates rose 1.2% in the week ending July 29th, according to National Mortgage Professional. This is the first time that mortgage applications rose in five weeks. The rise in mortgage applications also happened as the mortgage rate for a 30-year fixed mortgage had its largest decline since 2020. Mortgage rates fell 31 basis points to 5.43%. They were previously at the lowest level they have been in more than 22 years, prompting fear of another recession. The Federal Government raised interest rates, which increased mortgage rates and monthly payments. But since the government has been working to combat inflation, there might be some relief for homeowners and homebuyers in the future.

So what does this mean for anyone looking to purchase their first home? The lower rates can mean an increase in refinancing and purchase applications, welcomed news in this current hostile housing market. Joel Kan from the Mortgage Bankers Association tells Forbes that in combination with more inventory, lower mortgage rates could mean more purchase activity on the market. While an analyst for Bank of America reported to the financial magazine that mortgage rates could drop down to 4.5% by the end of the year. This could make affording a home much easier by reducing the spike the market has been seeing in housing prices.