Interest rates are starting to come down a bit in anticipation of the Federal Reserve reducing rates in September. Although inventory has not changed significantly, further decreases should provide some momentum for additional product on the market, from people who are willing to list their homes and buy up, buy down, or make a lateral move. It’s difficult, however, to know at what benchmark rate activity will really start jumping. After several years in an inventory-driven market, it will be an interesting test to see how we digest a sizeable increase in supply. For now, it’s a matter of keeping eyes and ears open for an uptick in for-sale signs around the neighborhood.
Every incremental change introduces different opportunities within the marketplace. For cash-rich buyers, or those who have interim financing, it may be a good time to negotiate: With rates declining, sellers are anticipating a bit of a bump in the market. Meanwhile, sellers in the position to do so may want to consider offering carry-back financing or installment sales. Closing the gap on a 5% carry-back deal—with a solid deed of trust in place to protect your interest—might be just enough to incentivize a buyer to step up and pay a potentially higher price for your property.
July to August 2024, the supply-demand index dropped from 100.7 to 99.7, indicating an overall market in a balanced state. Although the Federal Reserve opted not to reduce rates, reports the next day revealed an unemployment rate increase from 4.1% to 4.3%. This caused investors to seek safety in bonds, resulting in mortgage rates falling from a high of 6.9% in July to a low of 6.3% by August 5—though the housing market doesn’t move as fast as Wall Street. Price measures are expected to see minimal volatility for the next 3-6 months with annual appreciation near the rate of inflation.
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