Mortgage Rates Remain Low and Stable
The Fed left policy rates unchanged the June 2017 FOMC meeting. They did say though that they will begin reducing their balance sheet ‘relatively soon.’
Wall Street’s reaction to the Fed’s statement was also positive for mortgage rates. Speculation is the Fed will take gradual action when tightening economic policy, but this may not start until or after the December Fed meeting.
Inflation continues to come in below the Fed’s desired level of 2% and will be monitored. Low inflation is supportive of lower mortgage rates.
Home Prices Are Stabilizing As Inventory Slowly Increases
Existing home sales fell more than expected in June, and lack of affordable homes is the likely cause. Lack of homes has led to bidding wars and higher home prices in the Portland Metro market for homes below $500,000. Higher priced homes are shifting into a balanced market with about 6 months of inventory available for sale. This balancing is resulting in price reductions in up to 38% of the homes in some metro area zip codes.
After a sluggish start to 2017, new home sales increased for the second straight month in June. The inventory of new homes on the market increased 1.1%, the highest level in 8 years. This is another indicator of a balancing in the market and suggests that appreciation will flatten over the rest of 2017.
According to Case-Shiller, major US metro area home prices are up 5.7% year-over-year. This is the sweet spot for healthy market apprecation and an indicator of market stability. Inventory of existing homes for sale in the US is around 4 months, still a seller’s market overall, but less robust than the past 4 years.
Juli Martin is a Principal Real Estate Broker representing both sellers and buyers with Cascade Sotheby’s International Realty in Portland, Oregon. To contact: Cell +1-971-808-9618 or email email@example.com