While the overall economy has navigated a rocky road the past two years, the housing market has been more boom than bust since mid-2019. However, three economic factors could bring about major changes in the housing market over the next few months. They include:
- Rising interest rates
Economists expect the Federal Reserve to raise interest rates at least three times this year. Borrowers are already seeing an increase in mortgage loan rates, and they will likely continue to rise as overall rates go up.
- Decreasing financial security Many programs designed to help out-of-work Americans have expired. This may lead to increased housing supply as more homeowners consider downsizing, selling or even opting for a short sale.
- Lagging consumer confidence
People are more likely to make long-term purchasing decisions when they're optimistic about the future. As the pandemic era evolved, consumer confidence fell slightly last month. These fluctuations could continue well into the coming year.