Mortgage rates rose sharply above 3% this week, as consumer and producer prices continue to inflate due to persistent supply bottlenecks and labor difficulties. According to the finance mortgage provider Freddie Mac, the 30-year fixed mortgage rate moved up to 3.05% from 2.99% the previous week. It seems that rates at the 2% range are over.
A question that pops up for millions of homeowners is whether it is a good time to sell their home. Homeowners typically sell their home after 16 years, according to the U.S. Census Bureau. Meanwhile, there are about 20.2 million homeowners that purchased their home in the last 10 to 19 years. Thus, many of these homeowners may wonder if they should sell their home now or wait.
Here are a couple of big reasons why it’s a good time to sell.
First of all, there is no doubt that it’s a seller’s market. Although the market typically slows down in fall, there is still stiff competition among buyers, with multiple offers for each home due to low inventory. As a result, sellers continue to have strong negotiating power as most of them are able to sell their home for higher than the asking price. Comparing sales volume with current inventory, we are also seeing that homebuying activity is very strong. Specifically, more than half of the inventory was sold in August since the sales to inventory ratio was 0.51. Nevertheless, the sales to inventory ratio was only 0.07 back in 2009. Remember that a higher ratio implies a seller’s market, while a lower ratio implies a buyer’s market.
Secondly, mortgage rates are still historically low while the outlook is for higher rates in the upcoming year. With lingering inflation, the Fed may start tapering earlier than expected. Specifically, the Fed recently announced that it will begin gradually decreasing its purchases of long-term Treasuries and mortgage-backed securities before the end of the year. Moreover, the Fed will also raise interest rates by the first half of 2022 in order to control elevated inflation. Both of these strategies are expected to move up mortgage rates in 2022. The National Association of REALTORS® forecasts the 30-year fixed mortgage rate will reach 3.6% by mid-2022.