There’s good news on the horizon for spring home buyers. According to recent industry data, the rate at which home prices are going up is beginning to slow down.
“Home-price growth continued to slow in January, providing critical relief to buyers heading into the critical spring selling season,” writes Laura Kusisto, contributing writer to realtor.com. “The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 4.3% in January, down from 4.6% the prior month.”
Not only are home prices accelerating at a lower pace, but mortgage rates are staying low and the inventory of homes for sale is on the rise, giving buyers even more to look forward to this season. Still, Kusisto cautions that home prices continue to see gains in most metros. This makes affordability a persistent challenge for lower- to moderate-income buyers and first time home buyers.
Where Prices Are Rising Fastest
Interestingly, some of the index’s once-hot West Coast metros are now seeing sharp slowdowns in price growth. Seattle and San Francisco are two that showed significant slowing in recent months, according to Kusisto. Instead, she says, the American housing market is seeing more drive from metros in the South that are attempting to recover from the recession.
Las Vegas took the title of metro with the fastest home-price growth in the nation for the eighth straight month at 10.5%. Phoenix had the second-fastest price growth at 7.5% followed by Minneapolis at 5.1%.
Mortgage Rates Staying Low
This past fall saw a less-than-stellar real estate market, with very slowed activity levels. This was due partially to interest rates on home loans rising close to 5% while home prices grew by more than 5%. The combination of these factors kept many would-be buyers out of the market, as it made affordability more difficult.
Now that mortgage rates are beginning to dip lower again, existing-home sales have seen a boost, increasing 11.8% in February compared with the month before, according to data from the National Association of Realtors.
Why Now May Be A Good Time To Buy
If you’re considering buying a home this season, there are plenty of reasons to take the plunge. As we already mentioned, lower mortgage rates are helping keep home financing more affordable, plus with the variety of low and zero money down loan options available in today’s marketplace, it can be easier than you think to close on a home without paying a ton of money up front.
Higher inventory also means today’s home shoppers have more to choose from. The market was in solid seller’s territory for a while, but things are beginning to shift. The tide is moving more in the direction of a buyer’s market, giving them more negotiating power. Still, if you’re thinking of venturing out to do some serious house hunting, do yourself a favor and get preapproved for financing beforehand. Doing so can put you in an even better position as a home buyer, as sellers are more likely to accept offers from buyers who already have their loan in place.
Although prices are still on the rise throughout most of the country, the fact that they’re not rising as fast is a good sign. This is the market’s way of naturally balancing things out. Most people want home value to continue to move up over time — that’s what makes them a great longterm investment — but when prices accelerate too quickly or drop too drastically in a short time frame, it can be an indicator of a housing bubble or an economic downturn. Prices that are stable, but continue to inch forward, point to a healthy market–one in which buyers typically feel more comfortable investing.