US home prices are rising again, following the pre-pandemic trend of a 0.6% monthly increase. While prices are growing, inventory is still low, with buyers frustrated by high mortgage rates and sellers disappointed by offers. This creates a difficult market where neither buyers nor sellers are fully satisfied. New home sales are increasing as buyers turn to builders for more affordable options, but this is not enough to solve the housing supply shortage.
The Federal Reserve has kept interest rates the same, disappointing many who hoped for cuts. As a result, borrowing costs for things like mortgages, credit cards, and student loans will remain high for now. While inflation has eased slightly, it's still a concern, and the Fed wants to make sure it's under control before lowering rates. Once rates do start to come down, borrowing costs may gradually decrease, but they're unlikely to drop significantly.
The Federal Reserve is unlikely to lower interest rates this week, despite high inflation. While this means borrowing costs will stay high for mortgages, credit cards, and auto loans, it also means higher interest rates on savings accounts and certificates of deposit. Experts expect interest rate cuts in the coming months, but at a slower pace than the recent increases.
Despite traditionally being the peak season for home sales, recent years have witnessed a shift in trends. Experts now recommend sellers wait until June, as homes listed in the first two weeks of that month have historically sold for up to 2.3% more compared to spring listings. While home supply is recovering, it's still not sufficient to meet demand, keeping prices elevated. Buyers may consider purchasing now and refinancing later when mortgage rates potentially decrease during the summer.
Aspiring homeowners face challenges in affording a home due to rising living costs, insufficient income, and mortgage rates. Over half struggle to save for down payments. Credit card and student loan debt further hinder the path to homeownership. Individuals must consider long-term financial implications, including repairs and upgrades, to avoid becoming "house poor." Unexpected events and interest rate fluctuations add uncertainty to homeownership timelines. To overcome these challenges, individuals should assess their financial situation, prioritize goals, and plan accordingly.
