Fannie Mae’s chief economist, and other real estate pros, tell us the 3 things you need to know about the housing market now

The housing market isn’t an easy thing to pin down — and you’re not alone if you’re feeling like you’re getting mixed messages on the subject. On the one hand, mortgage rates are near historic lows — some 15-year rates are near 2% and some 30-year rates are below 3%, as you can see here — and many experts predict they will rise in the coming year. But on the other, housing prices are on the rise, and in plenty of areas have become unaffordable for many local families. Those factors are making some potential homebuyers wonder: Should I buy now?  So we asked Doug Duncan, Fannie Mae’s senior vice president and chief economist, and some other real estate pros, their thoughts on what’s going on with the housing market and whether now is the time to buy.

Mortgage rates remain low, but experts predict they will rise

A recent survey of housing experts published by Zillow revealed that pros expect interest rates to rise to 3.99% at the end of 2022, and for its part, Fannie Mae predicts that interest rates will average roughly 3.4% in 2022, up slightly from this year. Experts we spoke to said the same: Kate Wood, home and mortgage expert at NerdWallet, says we may see a “long-lasting upward trend” in mortgage rates, and Greg McBride, chief financial analyst at Bankrate, notes that come 2022, the general trend will be toward higher rates.

It’s still an extremely competitive market, but “things aren’t as frenetic as earlier in the year”

Home prices have risen roughly 20% over the past year — and most experts think they will continue to rise, albiet at a slower pace — but demand for homes is still high: “While economic uncertainty could potentially dampen mortgage demand over the longer term, we believe current market conditions remain conducive to home purchase activity, as demand for homes continues to far outstrip the supply available for sale,” Fannie Mae’s Duncan says. 

There are signs that the market is moderating, if only a little bit. “There’s been a bit more inventory of homes available for sale to come on the market and things aren’t as frenetic as earlier in the year, but this is still a very hot housing market where demand far exceeds supply in most markets,” says McBride. 

Stop trying to time the market looking for the perfect time to buy, instead focus on your personal circumstances

Fannie Mae’s deputy chief economist Mark Palim says timing mortgage rates and the housing market is hard, and instead recommends buyers look at their own wants and needs. “They should focus on personal life circumstances and how long they think they’ll be in the area,” says Palim. If you have locational stability and plan to be in the home for 5 years or more, Palim says buying instead of renting likely makes the most sense. But understand what you can truly afford, and don’t get caught up in the real estate frenzy: “Making the biggest financial decision of your life under duress is not a recipe for success,” says McBride.

Also see: The best month to buy a home