SEATTLE, WA — Recent figures from Zillow indicate a renewed vigor in the housing market as lower mortgage rates invigorate both buyers and sellers. This uptick comes as mortgage rates dropped to a two-year low of 6.08% in late September, enhancing buyers’ purchasing power by more than $40,000 compared to May. As a result, both home sales and new listings are inching closer to pre-pandemic levels, despite still being below the norm.
Zillow’s chief economist, Skylar Olsen, highlighted that September demonstrated a readiness among buyers and sellers to engage when conditions improve. “The mortgage rate spike after a strong jobs report early this month gave back some of those affordability gains, at least for now, stated Olsen. “Buyers should be prepared for more ups and downs, which means it’s crucial to have their finances in order and their expert team in place to act quickly, but not rashly, when they find the right house.”
In September, the typical U.S. home value slightly decreased to just under $361,000, with national home values growing by 2.4% over the past year—the slowest annual growth rate since last October. A reduction in the share of listings with price cuts from 26.2% in July to 25.1% in September suggests heightened competition among buyers.
Interestingly, the Southeast is seeing a shift towards a buyer’s market, with cities like Atlanta joining others in Florida, Georgia, Texas, Tennessee, and Louisiana. Factors such as abundant new listings and construction in these areas contrast with coastal regions, where homeowners are holding onto their properties, limiting new listings and making the market more competitive for buyers.
Looking ahead, October traditionally sees an increase in price cuts as sellers attempt to close deals before the holiday season. Despite a recent rise in mortgage rates to 6.32% as of October 10, the market’s trajectory remains uncertain. The Federal Reserve’s future rate decisions and other economic factors will continue to influence mortgage rates, making it crucial for homebuyers to track their affordability using tools like Zillow Home Loans’ BuyAbility℠.
As the market navigates these fluctuations, potential buyers should remain vigilant, prepared for both opportunities and challenges in an evolving economic landscape.
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