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The market has gone deeper into its slump, with existing and pending home sales falling as homebuyers continue to feel the squeeze of elevated mortgage rates, home prices and overall costs of living. However, the hope of a relatively active spring is still alive, according to Zillow’s latest market report.
The portal said home search activity peaks before Memorial Day when homebuyers, especially those with children, are more motivated to make a purchase before summer is in full swing. The increased competitiveness usually leads to a 1.6 percent boost in the final sales price — which could equal $5,600 extra dollars in homesellers’ pockets when they list the last two weeks of May.
The late-May trend is most pronounced in Chicago, Boston, Detroit, Minneapolis, St. Louis, Pittsburgh and Cincinnati, where homesellers could see premiums ranging from $5,500 to $10,000. However, other markets have a different peak time, with homesellers in Seattle, San Diego, Austin and San Diego needing to list during the second half of March to see high five-figure boosts in homebuyer offers.
Homesellers on the coasts will have a bit more time to get open house ready. Searches for Riverside, Portland, Philadelphia and Baltimore listings peak in June, while searches in Miami get red-hot in July. The city with the latest peak is Phoenix, where homesellers can get up to $6,400 more if they list the second half of November.
Orphe Divounguy
Although a peak in home searches usually leads to better outcomes for homesellers, Zillow Senior Economist Orphe Divounguy said mortgage rate fluctuations have thwarted potential home sales gains — a scenario that could play out again this spring.
Federal Reserve Chairman Jerome Powell said the bank doesn’t “need to be in a hurry” to cut short-term rates, especially as inflation makes a slow crawl back toward 2 percent. President Trump’s burgeoning trade war with Canada, Mexico and China has added to inflationary worries, with economists predicting a growing list of economic uncertainties will keep mortgage rates in the upper 6 percent range this year.
“In the past few years, mortgage rate fluctuations upended the traditional spring home shopping season,” Divounguy said. “Buyers who are on the edge of qualifying for a loan jump in and out of the market depending on what’s happening with rates. When rates fall, more buyers rush in, putting upward pressure on prices, which could happen at any time of year.”
