There was a lot of demand to buy a new home as mortgage rates stayed near record lows for most of the year. However, according to the National Association of Realtors, outstanding home sales fell 1.9% in June compared to May. And that could be a sign that the housing market is finally calming down.

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Will buyers soon enjoy lower property prices?

Pending home sales refer to contracts to buy a home that have been signed but not yet finalized, and are a measure of the strength of the housing market. Home prices are at record highs at this point, but that has been a deterrent for many buyers.

In May, home prices rose 17% from May last year, according to the S&P Case-Shiller National Home Price Index. This represents the largest annual gain on record and could explain why pending home sales have declined last month.

Of course, the low real estate portfolio was also an issue. In fact, a major reason home prices have spiked this year is that there weren't enough properties for buyers to choose from. So what happened is buyers were fighting over the same limited homes, trying to outbid each other, and driving house prices up.

Now Realtor.com reports that the number of newly listed properties in June increased by 5.5% compared to June 2020. Overall, however, the population is still well below the normal level. And that makes it a very difficult market for today's buyers to find their way around.

Should You Buy a Home Now?

With current home prices and market competition, now is not an ideal time to buy, even if mortgage rates are so competitive. But if inventory slowly increases and buyers become more conservative about how much to pay for a home, things could improve later in the year.

Now, if you have a compelling reason to buy a home – say your lease is about to expire and you don't want to extend it for another year – then you may want to keep searching for a home. Otherwise, it might be worth it to sit tight for a while.

There is a great chance that mortgage rates will remain competitive well into 2022 and possibly beyond. In other words, if you step away from today's tough housing market and wait and see, you won't necessarily miss the chance of setting a competitive home loan interest rate. What you can do, however, is to save yourself a world of stress and avoid paying for a home that would normally sell for much less.

Additionally, waiting for more inventory to hit the market means less likely to settle for a house that you aren't really in love with. That alone makes the wait worthwhile.

source https://seapointrealtors.com/2021/08/01/pending-home-sales-dropped-in-june-which-means-the-housing-market-could-be-cooling-off/

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