Last Updated on July 5, 2023 by Luke Feldbrugge
Welcome to the Housing Market Trends July 2023 monthly report from Homes for Heroes. This report focuses on the residential real estate housing market in terms of current sales activity, the current market and annual growth. We listen to the experts and boil down what they have to say to assist you, our heroes, with decision making regarding buying a home, selling your home, or refinancing your mortgage.
Housing Market Trends July: The Spread is Spreading
No one knows where mortgage interest rates are heading, but the last 12 months have taught us not to be too hopeful. Every time we predict that they will stabilize (after last year’s rate hikes), Federal Reserve Chairman Powell hints that he might raise them again. He is currently predicting another increase is on the horizon.
Higher interest rates in real estate aren’t good for anyone – buyers, sellers or refinancers. They generally depress the market for everyone. In the larger economic terms, there’s not a lot anyone, outside of the Fed, can do about interest rates. Another factor in the current mortgage rates, however, is the spread.
The spread is the distance between the 10-year Treasury Bond’s interest rate and the prevailing mortgage rates. For 50 years, these two rates have tracked each other.
In the past year, however, the spread between the two rates has grown to an all time high. That spread jacks the mortgage rate even higher than it’s been traditionally – from top average rate of 1.7% to 3.2%. This high rate of spread is typically explained by volatility (inflation, unemployment rate and the bond market).
Everyone agrees the spread is high right now, maybe too high. The hope is that in coming months it will drop back down (maybe not all the way down) to more normal traditional levels.
“It’s reasonable to assume that the spread and, therefore, mortgage rates will retreat in the second half of the year if the Fed takes its foot off the monetary tightening pedal and provides investors with more certainty. However, it’s unlikely that the spread will return to its historical average of 170 basis points*, as some risks are here to stay.” – Odeta Kushi, Deputy Chief Economist, First America
*Basis points: one percentage point (1%) equals 100 basis points.
So here’s hoping the spread will come down in future months, because the Fed doesn’t look like it’s going to reduce their interest rates on the 10-Year anytime soon.
Housing market trends are more accurate when they are more local. Find out what’s going on in your community by signing up to speak with your local Homes for Heroes real estate or mortgage specialist.
Housing Market Trends July: Home Prices
The long-predicted crash in housing prices never really happened. In fact, house prices and home values have stabilized after six months of slight decreases. This is great news for sellers. It should alleviate any fears of putting your house on the market if you are ready for a change.
Here’s a summary of monthly gains and losses, and what is currently happening with average home price growth. These July housing market trends are according to Case-Shiller, the Federal Housing Finance Agency and CoreLogic:
For home sellers, this is your market. Prices are stabilizing for new home sales, and even going up a bit for the third consecutive month. Moreover, housing supply is still low (a.k.a. low inventory) and buyer demand is high. There are still a lot more buyers than sellers, and new active listings are very slow right now. That means, if you are selling in the near future, you have a lot fewer competitors in the real estate market for the eager buyers out there.
Why Do You Buy/Sell?
Last month (June) was National Homeownership Month. It’s easy to get caught up in numbers and trends and housing market predictions. In reality, the reasons people like you buy their first home, or their next home, are more powerful than interest rates and housing values.
Likewise with those looking to sell their home. Homeownership is more than the sum of the housing market trends: it is a statement of people’s optimism, of their continuing support of their dreams. When grandparents are moving closer to their grandkids, interest rates are a secondary consideration. When first-time homebuyers have their down payment saved up and their mortgage pre-approved, they are going to go ahead and follow their dream. It’s the nature of homeownership.
It’s a good idea to pay attention to trends, but keep your eye on the ball.
Of course, it’s not just starry-eyed optimism that drives homeownership. There are other, more tangible, forces that make people want to own homes.
When you look at the the ways a home can improve your life, they add up quick:
- Financial benefits
- Social benefits
- Tax benefits
Homeownership makes a lot of sense. In fact, research indicates that 74% of Americans say that owning a home is more important to the American Dream than having a successful career (61%) or being able to retire (62%).
Homes for Heroes Rewards Heroes When They Buy, Sell or Refinance
We give Hero Rewards® to firefighters, EMS workers, law enforcement officers, military members (active, veteran or reserve), healthcare professionals and teachers when they buy, sell or refinance a home with our local specialists. We set you up with a real estate and mortgage specialist in your area to help you find a new home or sell your existing home. When you close on a home with your local Homes for Heroes specialists, you can save an average of $3,000 Sign up today to speak with a member of our team. They will answer your questions, and when you’re ready, they can connect you with our local real estate and mortgage specialists to begin the process.