Economic data reveals competitive edge for homebuyers

This week's economic data featured inflation reports from both the consumer (CPI) and producer (PPI) perspectives. While the headline figures showed an uptick, a significant portion of this increase can be attributed to rising energy prices, which are expected to stabilize or decrease in the coming months.

As a result, this week's data isn't expected to alter the prevailing expectation of a Federal Reserve pause in September. However, the outlook for the November meeting remains less certain.

Even though we’re looking at another possible rate increase to the Federal Funds Rate in November, next year’s forecast may actually signal an opportunity for homebuyers to purchase their home now.

INCREASED COMPETITION IS COMING

Due to higher rates, many buyers are waiting on the sidelines right now to purchase a home. Morningstar economists are predicting rates will fall to 5% by the end of next year and 4% the year after. As soon as rates drop to these levels, those who have been “waiting out the market” are going to begin actively looking for homes and making offers.

INCREASED COMPETITION COULD MEAN MORE EXPENSIVE HOMES

Lower interest rates will cause a lot of people to compete for the same house. These lower rates allow buyers to qualify for more, which means they can afford to put in higher bids for the home they want, thus driving up home prices even more. Inventory is expected to remain tight, "demand will probably exceed supply similar to current conditions,” and “supply is likely to remain below what we would deem a balanced market," says Chen Zao, Economic Lead at RedFin. 

These factors could lead to a sharp increase in home prices. In fact, an AEI housing market indicator report revealed they believe homes are expected to appreciate 7% in 2024.

AVOID THE RUSH: BUY NOW AND REFINANCE IF RATES DROP

Even though rates are high right now, they’re projected to fall in the coming years. It could be a smart decision to buy now and refinance later.

By acting now, you can lock in a stable home price you feel good about instead of having to compete in a seller’s market for your home. You could also gain more equity as the market drives up your home’s value, and you can decrease your monthly payments by refinancing to a lower rate.
 

GET MORE WITH MOVEMENT

When you buy and refinance with Movement, you come out ahead. We’re able to charge minimal fees since we already have your information from buying your home, and you’ll get access to our competitive market rates.

ARE YOU READY TO BUY?

Now is a great time to buy your new home! Reach out to your Movement loan officer today, and they’ll help you find the best solution for your situation.