Estimated read time: 2-3 minutes
As mortgage rates begin to fall, now is the right time to purchase a home. According to Lawrence Yun, chief economist of the National Association of Realtors, mortgage rates around 6% will soon become the new norm. Prospective buyers should consider purchasing now to avoid a potential buying frenzy when rates drop further.
"The mortgage rate will not go down to 3 percent, 4 percent, or even 5 percent," Yun said during a recent CNBC appearance. "The new normal will be around 6 percent."
In early July, Federal Reserve Chairman Jerome Powell suggested the labor market is slowing in a way that has diminished a major source of inflation, perhaps laying the groundwork for an interest rate cut in September.
For those waiting for home prices to fall, the wait will likely continue. In Utah, there have been only two periods of price declines over the past 50 years: the 1980s and the Great Recession (2008-2011), according to a report commissioned in 2024 by the Salt Lake Board of Realtors® and the Kem C. Gardner Institute at the University of Utah.
In the first six months of 2024, home prices for all housing types in Salt Lake County increased to $530,000, up 4% from $508,100 in the same period in 2023, according to UtahRealEstate.com. Higher prices did not slow down the number of homes sold. There were 6,030 homes sold from January through June 2024 in Salt Lake County, a 5% rise compared to the same period in 2023.
Across Utah, there were 10,346 active residential listings for sale in mid-July, a 28% increase from 8,080 active listings at the same time last year, according to UtahRealEstate.com. More listings mean more choices for home buyers. Remember the home buying hysteria during the Covid years, when 30-50 offers were made on nearly every listing? Despite higher interest rates, potential home buyers are better off today with more options. Additionally, refinancing is always an option as rates trend downward.
According to FreddieMac, your financial situation will dictate how much home you can afford, your interest rate, and your negotiating power. That said, keep in mind that home prices in Utah will continue to increase as the state's in-migration drives population growth and demand for housing higher.
When buying a home, remember to hire a Realtor. They will support you in negotiations and help you make a competitive offer. Your Realtor will also assist in navigating the home inspection, negotiating repairs or credits with the seller, and interpreting legal contracts and meeting deadlines.
