A Window of Opportunity for Homebuyers

Mortgage rates are much higher today than they were at the beginning of the year, and that’s had a clear impact on the housing market. As a result, the market is seeing a shift back toward the range of pre-pandemic levels for buyer demand and home sales.

However, the return to pre-pandemic levels is not a terrible thing. The property market really experienced some of its finest years in the years prior to the pandemic. To demonstrate how the current housing market is still robust as the market goes through this transition, it is crucial to contrast today with previous normal years rather than the abnormal pandemic years.

Higher Mortgage Rates Are Moderating the Housing Market 

The ShowingTime Showing Index tracks the traffic of home showings according to agents and brokers. It’s also a good indication of buyer demand over time. Here’s a look at their data going back to 2017 (see graph below):

Here’s a breakdown of the story this data tells:

• The 2017 through early 2020 numbers (shown in gray) give a good baseline of pre-pandemic demand. The steady up and down trends seen in each of these years show typical seasonality in the market.

• The blue on the graph represents the pandemic years. The height of those blue bars indicates home showings skyrocketed during the pandemic.

• The most recent data (shown in green), indicates buyer demand is moderating back toward more pre-pandemic levels.

This demonstrates that consumer demand is declining from levels witnessed over the previous two years and that the real estate boom is slowing down due to increasing borrowing rates. Because there is more inventory available, purchasing your future house should be easier for you than it would have been during the pandemic.

Higher Mortgage Rates Slow the Once Frenzied Pace of Home Sales

As mortgage rates started to rise this year, other shifts began to occur too. One additional example is the slowing pace of home sales. Using data from the National Association of Realtors (NAR), here’s a look at existing home sales going all the way back to 2017. Much like the previous graph, a similar trend emerges (see graph below):

Again, the data paints a picture of the shift:

• The pre-pandemic years (shown in gray) establish a baseline of the number of existing home sales in more typical years.

• The pandemic years (shown in blue) exceeded the level of sales seen in previous years. That’s largely because low mortgage rates during that time spurred buyer demand and home sales to new heights.

• This year (shown in green), the market is feeling the impact of higher mortgage rates and that’s moderating buyer demand (and by extension home sales). That’s why the expectation for home sales this year is closer to what the market saw in 2018-2019.

Why Is All of This Good News for You?

Both of those factors have opened up a window of opportunity for homeowners looking to move and for buyers looking to purchase a home. As demand moderates and the pace of home sales slow, housing inventory is able to grow – and that gives you more options for your home search.

So don’t let the headlines about the market cooling or moderating scare you. The housing market is still strong; it’s just easing off from the unsustainable frenzy it saw during the height of the pandemic – and that’s a good thing. It opens up new opportunities for you to find a home that meets your needs.

Bottom Line

Because of increasing mortgage rates, the housing market is changing, although it is still healthy. If you've been trying to buy a house over the past few years but it seemed impossible, this could be your chance. Although it's difficult to buy a property right now, there are more opportunities for those who are looking.