WLTW

Willis Towers Watson Public Limited Company

231.56
USD
-1.19%
231.56
USD
-1.19%
197.63 271.87
52 weeks
52 weeks

Mkt Cap 28.85B

Shares Out 124.61M

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Home Buyers May Finally Be Saying No to Sky-High Prices

The housing market has been tough to crack since the second half of 2020, when mortgage rates plunged to record lows and buyers sought to capitalize on them. At the same time, sellers haven't rushed to list their homes since the start of the pandemic. And these days, housing inventory is considerably lower than it would be in a normal market. Because housing inventory has been so limited, the demand for homes has exceeded the supply. That's caused home prices to spike. In April, the median sale price for an existing home rose to $391,200, a 14.8% uptick from a year prior, according to the National Association of Realtors (NAR). And that, combined with higher mortgage rates, may finally be pushing buyers over the edge. Buyers are backing off Mortgage applications for home purchases dropped 14% in April compared to March, reports the Mortgage Bankers Association. Applications were down 10.6% from April 2021. Given that the average 30-year mortgage rate is well over 5%, it's not surprising that buyers are less eager to borrow. But inflated home prices are also playing a role in that decision. And unfortunately, home prices are likely to stay high until inventory picks up significantly. The NAR reports that as of the end of April, there was a mere 2.2-month supply of homes on the market, whereas a normal housing market would offer a 4- to 6-month supply. It's that glaring lack of inventory that makes it so difficult for buyers to purchase homes, and means a large number of properties land in bidding wars. Should buyers wait to purchase a home? At this point, it's pretty clear that 2022 is not going to be the best year to purchase property. Granted, 2021 wasn't exactly a prime time for a home purchase, either, given that property values were very high then as well. But at least last year, buyers got to benefit from low, competitive mortgage rates. Today's rates make borrowing a lot less affordable and appealing. Based on the overall state of the housing market, it could work to buyers' benefit to wait things out until 2023 at the least. That gives inventory some time to build, which could help bridge the gap between existing supply and overwhelming demand. Plus, a big reason sellers have hesitated to list homes is that the pandemic has been a source of unrest since early 2020. At this point, the pandemic is still with us, but Americans are increasingly learning to coexist with it. As that shift in thinking hits more sellers, they may be more motivated to list their homes. And once inventory picks up enough, home prices could start to come down. It's premature to assume real estate inventory will return to normal levels by 2023. But at this point, it's pretty clear that 2022 won't be the year the housing market cools off. The Ascent's Best Mortgage Lender of 2022 Mortgage rates are on the rise — and fast. But they’re still relatively low by historical standards. So, if you want to take advantage of rates before they climb too high, you’ll want to find a lender who can help you secure the best rate possible. That is where Better Mortgage comes in. You can get pre-approved in as little as 3 minutes, with no hard credit check, and lock your rate at any time. Another plus? They don’t charge origination or lender fees (which can be as high as 2% of the loan amount for some lenders). We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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