Homebuyer Demand Is Softening, and Sellers Are Being Forced to Respond

As part of its fast track to control inflation, the Fed sent mortgage rates above 6% on Wednesday to their highest level since 2008. Meanwhile, new housing starts dropped 14.4% in May to an annualized rate of 1.55 million, the lowest share since April 2021, Forbes reports. Home prices have risen 24% since April 2020 as a result of the mid-pandemic Great Migration coupled with a nationwide housing shortage, but experts aren’t relaying only bad news in an era of fast-rising inflation.

Some buyers are speeding into home sales to snag available properties before rates surge even higher, and those who are holding back are creating a chasm in demand that is forcing a number of sellers to lower their home prices. Though prices are expected to remain high for much of 2022, experts say a slowdown is underway but will take several months to make a tangible difference in the housing market.

As rates keep rising, some buyers will be priced out while others push forward more quickly in anticipation of another hike. “People want to buy now because they know rates are only going up,” says Gregory Heym, chief economist at Brown Harris Stevens. The sense of urgency is warranted. Homes are staying on the market for less time than ever before. The average seller accepts an offer within 31 days of listing their home, compared to 71 days in May of 2020, according to data from Realtor.com.

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