“I expect the Fed to cut interest rates this summer to bolster the economy in the face of trade tensions,” said Redfin chief economist Daryl Fairweather. “That could cause 30-year fixed mortgage interest rates to fall below 3.5 percent by the end of the year, which is lower than they’ve been since October 2016. That will encourage even more prospective buyers who’ve been waiting on the sidelines to put their hat in the ring for homes that will slide into the realm of affordability as rates decline. While lower mortgage rates will inspire some people to list their homes for sale, so they can move and so they can capitalize on the increased demand, it’s unlikely to create enough new inventory to meet demand. As a result, the healthy around-3 percent rate of home price growth we’ve been enjoying lately is likely to be short-lived. We could see price growth surge to a rate of more than 8 percent, on par with the growth we were seeing in late-2016. Sales could also rebound, with growth reaching double-digits compared with last year, but the growth would be temporary. In the long run, without a substantial increase in the supply of housing, we’ll see sales slow back down, but home prices will continue to grow at a stronger rate than we’ve grown accustomed to this year.”
Buy now to front run the stampede?