Since the start of the year, the U.S. housing market has been very tough to navigate. As we go into June, here are some of the things buyers, sellers, and investors should expect.
1. Mortgage rates will likely remain high
Mortgage rates have climbed substantially since the start of the year. And there are a couple of reasons for that.
First, lenders slashed rates when the COVID-19 outbreak hit and economic conditions quickly soured. As such, mortgage rates sat at record lows during much of 2020 and remained very low throughout 2021. At some point, though, rates were apt to start rising again -- and it happened to occur early this year.
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Furthermore, the Federal Reserve is moving forward with a series of rate hikes this year in an attempt to slow inflation. And while the Fed doesn't set consumer borrowing rates, its actions commonly influence them. That's a big reason why mortgage rates have risen sharply already in 2022 and will likely remain high for the rest of the year.
In fact, rates dipped slightly in late May, but they're still notably higher than they were at any point in 2021. And so while rates won't necessarily jump again in June, they're unlikely to get much lower than they are today. That could make it difficult for both buyers and real estate investors to finance a home purchase.
2. Housing inventory is unlikely to pick up
Normally, spring is when we see an influx of property listings. But that didn't happen last year, and it doesn't appear to be happening this year.
In fact, as of late April, the inventory of unsold existing homes climbed to 1.03 million, as per the National Association of Realtors (NAR). That represents a 2.2-month supply of homes. But it commonly takes a four- to six-month supply to create a housing market that doesn't leave buyers in such a desperate spot.
Because housing inventory so far hasn't risen substantially in response to rising mortgage rates, there's reason to believe it will only increase modestly in June. That means bidding wars are likely to be a staple in the housing market this month.
3. Homes will be expensive to buy
The NAR reports that in April, the median existing home price rose to $391,200. That represents a 14.8% increase from a year prior.
Now it's worth noting that April's annual home sale gains came in slightly lower than March's. But still, the bottom line is that homes are expensive to buy, and prices are unlikely to come down in the absence of an uptick in inventory. And so anyone who looks to buy a home in June will likely pay a premium, and the average home seller in June will probably be looking at a nice sale price.
Should you buy or sell in June?
June could end up being a tough time to buy a home due to higher borrowing rates, sluggish inventory, and inflated home prices. But it could end up being a great month to sell for the latter two reasons. Furthermore, we don't know to what extent mortgage rates will keep rising this year, so it could pay to put a home listing together before borrowing gets more expensive -- and buyers are turned away.
