Aprils home sales numbers didn’t reflect where rates were for the month. March rates were down (and down fairly dramatically) when April’s sales contracts were signed. You would have expected low rates to pull more borrowers into the spring home buying market a little bit early. The fact those low rates didn’t have that effect almost doesn’t make sense — until you look at the root causes as to why.
Home prices and a lack of homes for sale at the lower end of the market kept many potential homebuyers from taking advantage of the lower rates. The change in rates was attractive if you could afford the home you were looking for, but was not dramatic enough to make a higher end homes more affordable.
April marked the 14th straight month of annual home sale declines. It also marked the 86th month of price increases. Recent price increases are far less dramatic than we have seen over that past couple of years, though.
Seems like with moderate rates and reasonable price increases we may be starting to see the market find its new normal in 2019.
Most who are supposed to know see inventory increasing, rates remaining low (by historical standards), wages increasing, and home sales ticking up during the remainder of 2019. If all that is true and inventory actually increases at the lower end of the market, there may be hope for all those potential first-time homebuyers currently on the outside looking in. It is going to be about inventory and the prices of that inventory — not mortgage rates.