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The Austin housing market has recently hit a significant milestone, reaching an 8-year high with 4.3 months of inventory. This increase in housing supply is a game-changer for potential homebuyers and sellers, and understanding its implications is crucial. Over 10,000 homes are for sale, selling for 95% of their original listing price.
Mortgage Rates and Their Impact
According to Freddie Mac, mortgage rates have shown a slight downward trend, with the average rate for a 30-year fixed home loan falling from 7.09% to 7.02%. This decrease is partly due to a dip in the 10-year Treasury yield following a slight easing in inflation. Although the drop in mortgage rates is minimal, it can still provide more budget flexibility for prospective homebuyers.
Sam Khater, Freddie Mac’s chief economist, noted that mortgage rates have fluctuated recently, contributing to a somewhat sluggish spring housing market. However, the recent reduction in rates could encourage more activity among buyers who have been hesitant due to higher borrowing costs.
A Surge in Housing Supply
The most notable development is the surge in housing supply. For April 2024, the total number of homes for sale in Austin was 34% higher than the previous year. This influx of homes for sale is the highest in over 8 years, a significant milestone that can reshape the market dynamics.
“...The uptick in affordable inventory in the $300,000 range allows more first-time buyers to achieve homeownership. As we progress through the year, mortgage rates are expected to remain elevated with a slight possibility of a gradual decrease, which would increase buyers’ purchasing power,” said Clare Losey, Ph.D., housing economist for Unlock MLS and the Austin Board of REALTORS®.
What This Means for Buyers
The increased housing supply for homebuyers means more choices and potentially less competition. With more homes on the market, buyers might find it easier to find properties that meet their needs and budgets. A slight drop in mortgage rates can make financing a home more affordable.
Implications for Sellers
For sellers, the situation presents a mixed bag. On one hand, increased inventory means more competition among sellers, which could put downward pressure on home prices. On the other hand, the continued strong listing activity suggests that motivated buyers are still in the market, especially those waiting for more options.
“The future of the Austin housing market will largely depend on mortgage rate trends and broader economic factors like labor market conditions and inflation. New listing activity will be closely tied to these variables, but the current data suggests a positive direction,” said John Coake, Vice President of Sales at Realty Austin Compass.
