Health & Fitness
The Impact of Rising Interest Rates
From May through June of this year, interest rates suddenly jumped. The 30-year fixed mortgage rate increased more than 110 basis points from 3.35 percent during the first week of May through the end of June before leveling in July. This news struck fear into the hearts of some homebuyers, but is the fear necessary and will rates impact home sales? Industry insiders don’t think so.
Though interest rates increased in a very short time period, they are still historically very low. It is true that a rise in rates may impact some prospective homebuyers from being able to afford a more expensive home. For many however, 4 percent for a 30-year fixed mortgage is still an incredible bargain when compared to previous years. Additionally, housing affordability still remains favorable in many parts of the country.
Some may blame mortgage rates for a slight dip in home sales from May to June as reported by the National Association of Realtors (NAR), but sales are still up 15.2 percent in June when compared to June 2012.
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Insiders attribute the dip to a lack of inventory. Total housing inventory rose only slightly by 1.9 percent at the end of June when compared to May, which represents a 5.2-month supply. A 6 month supply is considered a balanced market.
This is good news for potential home sellers. Pent-up demand is driving prices upwards. According to NAR, the national median price for all existing housing types shows seven straight months of double-digit year-over-year increases. The national median home price for all housing types was $214,200 in June, which is up 13.5 percent from last year. To see if this is happening in your area of interest, look to the graph or call our office. Our Coldwell Banker agent will run the numbers for you and you may find that you can finally put your home on the market.
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Buyers take note. Even with price and interest rate increases, homes are still more affordable today than in the past.
If you need guidance and direction in the current market, and want to understand how mortgage rates, inventory and pricing impact your homeownership and sales goals, please call me today. I am here to lead you through the process.
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