If you’re looking to purchase a home, there is some good news. Market conditions are slowly looking up!
In previous columns, I’ve written about the correlation between higher interest rates and the lower number of homes for sale. To recap, the idea is that with higher interest rates, homeowners who own an existing home, with a low interest rate on their mortgage, are less likely to sell that home, because their new mortgage will have a much higher interest rate, increasing their monthly housing payment substantially.
These conditions create a market with relatively little available home inventory for sale, and that favors sellers. As fewer homes are for sale, we have experienced a market that often yields multiple offers for those homes and sales substantially above the asking price for high-quality homes in desirable areas. It’s been a formula for a high anxiety experience for home buyers. But things are starting to change.
As real estate practitioners, we are beginning to feel it. There might be fewer offers on a home today that six months ago might have received a dozen or more. The terms required to purchase a home might be a little less aggressive now than earlier in the year. This is all anecdotal, but recent data is confirming what our observations tell us.
A report from Realtor.com® found that in September, there were 11.6 percent more new home listings nationally compared to a year earlier. In Erie County, we’ve seen more modest growth in year-over-year listings, to 901 in September 2024, up 3.9 percent from the 866 listed in 2023.
The change has been even more dramatic in East Aurora, where 16 new listings came on the market in September 2024, more than double the seven that were listed in September 2023. This is a small sample size and a modest amount of raw inventory growth, but it is encouraging.
We’ve got a long way to go to reach pre-pandemic inventory levels (September 2019 had 1,065 new listings throughout Erie County), but the market is moving and the pendulum has begun to swing toward equilibrium between a buyers and seller’s market.
According to Freddie Mac, as of Oct. 4, the average rate on a 30-year mortgage is 6.12 percent. Our hypothesis has been that as interest rates drop, more homes will become available for sale. This trend is starting to take place. As those interest rates descend into the mid-fives, I believe we will see a lot of homeowners who have been on the sidelines waiting to enter the market. This should be good news for frustrated home seekers in the coming months.
