Leaves are not the only thing falling as we enter the autumn season. So are home prices. But just like the leaves take their time to transition from one color to the next, home prices are also falling slowly. This slow transition means that if you are in the market to sell your home, it is still a good time — the fall real estate market remains fairly strong.
In this post, we'll go over fall real estate market predictions from top experts around the industry.
New Home Sales Pick Up
The market for new homes is staying strong this season. Figures from the U.S. Census Bureau show that new home sales picked up in August, nearly tying last year's record-shattering pace. August new home sales rose almost 29% from July, bringing the annual pace to 685,000 new home sales — just shy of last year's 686,000 sales.
Prices Are Falling, But Not Crashing
Rising interest rates are causing home prices to fall from their historic highs earlier in the year. But, experts assert the market is not crashing. Instead, they expect prices to fall between 5-10% this fall and winter, with steeper declines happening on the West Coast. Although we're seeing prices come down, they're still higher than normal. In fact, they're still 43% higher across the board than they were when the Covid-19 pandemic started.
The Fed will likely continue raising interest rates to try to combat inflation, so if you are flirting with the idea of selling your home, now is the time to act to take advantage of the fall real estate market. As winter rushes in and temperatures drop, home prices are likely to drop even more as interest rates rise.
With several experts agreeing that we are not currently in a housing bubble and the market is not expected to crash anytime soon, it is good to know the warning sign of a market crash to watch out for:
- Increasing loan-to-income levels
- Higher mortgage rates
- Lower economic growth
- Rising mortgage balances and mortgage loan numbers
- Overpriced properties that outpace affordability and inflation
- A lack of affordable housing
- Wages remain stagnant while home prices climb
- Cautious builders slow down the number of homes they're building
As prices inch their way up and the housing shortage we saw during the pandemic and shortly after eases, we are seeing more inventory, and it is sitting for longer. Experts agree that this is no reason to panic. The fall traditionally sees a drop in demand as kids return to school and the weather becomes less prime for moving and showing homes.
Jeb Smith, an agent with Coldwell Banker Realty in California, said he's seeing more homes for buyers to choose from.
"As of today, we are shifting back to more 'normal' times as inventory has risen back to 2020 levels in many markets along with less buyer demand out there, meaning buyers are having to do less of the crazy stuff they were having to do during the pandemic to get their offer accepted," he said.
Rising Interest Rates
As we mentioned, interest rates are on the up and up, and that will likely continue as the Federal Reserve does all it can to combat historical inflation. As of September 2022, the average rate for a 30-year, fixed-rate mortgage is 7.6%, a significant increase from the mid-pandemic rates that were below 3%.
Time on the Market is Climbing
Experts are considering the increase in days-on-market for their fall real estate market predictions. Where this time last year, homes were flying under contact before most buyers could even get in for a showing, we are heading back toward a more steady "time on market" average. The average home is currently on the market for more than a month. It is important to note that this kind of slowdown is normal for this time of year and should not scare sellers away.
Just because you may not accept an hour within four hours of listing your home (which can still happen) does not mean your home will still sell fast this fall. The more expensive a home is, the longer it stays on the market, so if you have a moderately priced home to sell this fall, you should have nothing to worry about. Even if you are in the market to list a multi-million dollar home, remember, the market is still strong; homes are just not being sold overnight for the most part — but with an effective real estate agent, anything can happen!