Sellers Still Thriving as Home Prices Remain High


The most recent Home Price Expectations Survey forecasts home prices will continue appreciating over the next five years. As home values flourish mortgage rates remain historically low. According to Freddie Mac This Week in Real Estate the average 30-year fixed-rate mortgage fell eight basis points from the prior week to the lowest levels since February. Below are a few newsworthy events from the first full week of July that influence our business: 

Fannie Mae: Sellers Still Thriving As Home Prices Stay High. Sellers, rejoice. Roughly 77% of respondents to Fannie Mae’s Home Purchase Sentiment Index (HPSI), a composite index designed to track the housing market and consumer confidence to sell or buy a home, said now is a good time to sell. That’s up from 67% the prior month. One group that continues to feel the pain of high home prices is first-time homebuyers – even with mortgage rates remaining at historically low levels, said Doug Duncan, Fannie Mae’s senior vice president and chief economist. However, low inventory remains an issue, and homes are still being snatched up as soon as they hit the market, he said. “It’s likely that affordability concerns are more greatly affecting those who aspire to be first-time homeowners than other consumer segments who have already established homeownership,” Duncan said. “But despite the pessimism in homebuying conditions, we expect demand for housing to persist at an elevated level through the rest of the year.” 

Mortgage Rates Officially Hit 5-Month Lows. With yesterday’s mortgage rates already near longer-term lows, all it took was a modest improvement for today’s rates to officially hit their best levels since February. The strong move in the bond market (which dictates rates) was more than enough. Back in February, we were passing through the present rate range on the way UP, and there were few – if any – reasons to think that we’d return to those levels given the present realities. Specifically, covid case counts are roughly as low as they’ve been since the start of the pandemic. Economic data has been strong. Inflation metrics have been running hot (inflation is bad for rates). And the Fed is increasingly talking about dialing back its rate-friendly bond-buying programs. 

A Look at Home Price Appreciation Through 2025. Homeowners are witnessing their financial stability and well-being grow to record levels. In more good news for homeowners, the most recent Home Price Expectations Survey forecasts home prices will continue appreciating over the next five years, adding to the record amount of equity homeowners have already gained over the past year. Home prices are climbing today, and the data in the survey indicates they’ll continue to increase, but at rates that approach a more normal pace. Even still, the amount of household wealth a homeowner stands to earn going forward is substantial. This truly becomes clear when we consider a scenario using a median-priced home purchased in January of 2021 and the projected rate of appreciation on that home over the next five years. As the graph below illustrates, a homeowner could increase their net worth by a significant amount – over $93,000 dollars by 2026. Home prices are expected to continue appreciating over the next five years, and the associated equity gains are the quickest way homeowners can build household wealth.

Did you know every home listed for sale with Berkshire Hathaway HomeServices Northwest
Real Estate is eligible to receive no-obligation home warranty coverage from American Home
Shield or 2-10 Home Warranty the first six months the home is listed with our company?