'Competitive' spring homebuying season is starting early this year, industry analyst says
Despite higher prices, recent mortgage rates and stabilizing inventory levels may be advantageous for homebuyers this spring, one economist recently said. (iStock)
Amid concern about rising mortgage rates, homebuyers are entering the market earlier than usual this spring, according to George Ratiu, manager of economic research at Realtor.com.
"Markets are experiencing an early start to the spring season with solid demand driving inventory lower and pushing prices to new record highs," Ratiu said in a weekly housing market update. "Realtor.com's February data reveals that as buyers try to get ahead of rising rates, homes are selling at a fast pace while listing prices surpassed last year's July seasonal high, closing in on $400,000."
Ratiu added that low inventory and record home price growth signal "a competitive early spring season from homebuyers." But amid the challenges buyers face, housing inventory started to increase last month as more new construction homes hit the market.
Keep reading to learn more about the 2022 homebuying season, as well as how current homeowners may be able to take advantage of low rates to refinance. If you're planning on buying or refinancing a home this spring, be sure to visit Credible to compare mortgage rates across multiple lenders at once.
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Spring housing market forecast gives buyers ‘a glimmer of hope’
Although the housing market was competitive in February, Ratiu said there's "a glimmer of hope" for prospective buyers this spring — more available homes.
"The number of newly listed homes picked up in the last two weeks of February, hinting that more sellers are planning to enter the market in the next two months," Ratiu said.
Mortgage interest rates also dropped for two consecutive weeks in February, according to Freddie Mac, which is fueling real estate activity and "offering buyers a reprieve from the January surge," Ratiu said. However, the average 30-year mortgage rate did tick up on March 10, which may motivate buyers to lock in a mortgage preapproval before rates continue to rise.
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High inflation is another factor to consider if you're buying a home this spring. About three-quarters (73%) of homebuyers and sellers said that inflation is impacting their plans, according to a recent survey from real estate company Redfin.
Soaring consumer prices may continue to push mortgage rates higher. Inflation rose at an annual pace of 7.9% in February, which is the highest rate in 40 years and well above the Federal Reserve's 2% target. As a result, the central bank is planning to raise the federal funds rate by a quarter-point later this month, Fed Chair Jerome Powell said.
As the Fed plans to implement multiple rate hikes in 2022 to offset rising consumer prices, buyers will need to be more diligent when locking in an interest rate on a home loan. One way to combat rising rates is to shop around across multiple mortgage lenders to find the lowest rate possible for your financial situation. You can compare mortgage purchase rates for free without impacting your credit score on Credible.
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Drop in mortgage rates gives homeowners the opportunity to refinance
Lower mortgage rates aren't just fueling home purchase activity — they're also "welcomed by homeowners seeking to refinance," Ratiu said. Average rates tend to be lower for the 15-year mortgage term, which is a popular loan length for refinancing.
Additionally, skyrocketing home values may be advantageous for homeowners considering a cash-out mortgage refinance. About two-thirds of U.S. metros saw double-digit home price appreciation in the fourth quarter of 2021, according to the National Association of Realtors (NAR). This means that homeowners have more tappable equity they can use to finance home improvements or pay off higher-interest debt.
If you're considering refinancing your home loan, you can browse current mortgage rates in the table below. Then, visit Credible to compare offers and begin the mortgage refinancing process.
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