Over the last few years, sellers have been on top of the housing market. This spring, housing market conditions are favoring buyers in major metropolitan areas around the country. Factors favoring buyers include a decline in mortgage interest rates, trends in home prices, rising inventory, and homes spending more days on the market.
Borrowing to purchase a home has become more affordable. The spring housing market has begun with mortgage interest rates near historic lows. For 30-year fixed-rate mortgages, the interest rate dropped to 4.17 percent in March 2019. The rate was 4.54 percent a year ago and four weeks prior.
Prices have started to favor buyers. Nationally, home prices have increased by 0.6 percent over the last year, which is a significant drop from the 10 percent price growth over the year prior. In some metropolitan areas, prices are decreasing. Home prices have slipped by 15.2 percent in Bridgeport, Connecticut, which is the most significant price drop in the country. Housing prices have also declined in San Jose, Honolulu, and San Francisco.
The inventory of homes for sale is increasing. Compared to the same period last year, the number of homes for sale was up 2.9 percent in February 2019. Seattle and San Jose led the nation in inventory growth at 101.2 percent and 82.1 percent respectively. Inventory growth seems to be driven in part by homes spending more days on the market. While the national median number of days homes spent on the market was 35 in May 2018, it was 59 days in February 2019. When comparing that month with February 2018, the number of days homes spent on the market has gone up sharply in several markets. The increase was by 25 days in Santa Cruz, by 13 days in Sacramento, and by 11 days in Modesto.
The combination of low mortgage rates, rising inventory, and homes spending more time on the market has created widespread homebuyer confidence. Real estate agents report signs of homebuyer confidence such as fewer bidding wars and a willingness to wait rather than rush into a home purchase. Another indication comes from Redfin agents who have seen the portion of contracts with a sale contingency go up to 7.1 percent for February 2019. That’s two points over the same month last year.