It looks like mortgage rates may pump the brakes on an expected robust early start to the spring home buying and selling season. The weekly 30-year fixed-rate mortgage rate average has reversed its downward trajectory. 

Rates were tracking Fannie May’s first-quarter estimate until early February when strong economic reports paused the downward trajectory. That prompted Fannie to up its first-quarter estimate to a 6.5% average from the previous 6.4%. Rates were a little south of the 7% range in late February. 

The second-quarter average estimate is 6.2%. That’s what local real estate professionals are watching. It’s the range that could bring 10,000 locals back to the market, according to the National Association of REALTORS®’ (NAR) Research Department. Fannie’s third-quarter 6% and fourth-quarter 5.8% expected averages would be a nice fit to the NAR outlook, but there’s another side to that story.  

Pundits who have been cheering a decline are now hearing the musings of analysts who are beginning to wonder if the Federal Reserve might back off the expected May interest rate cuts.   

Although February’s reversal of the declining mortgage rates trend has been small, anything and everything that hints at pushing the market back to where it was last year resonates. NBC news headline about it was “Welcome to the housing market’s new normal – 7% mortgage rates and all.”  

That may have afforded a short-term condition more weight than it deserves. 

Beyond that headline was some good advice on someone with a more measured way of looking at things – NAR’s Chief Economist, Lawrence Yun. “Start early and work with a local specialist.”  

Those are good watch words for the Tri-Cities region.  

Despite the short-term mortgage rates disruption, the local longer-term outlook for a challenging, but somewhat better year remains unchanged. 

Inventory is slowly increasing. Buyers still must contend with a strong sellers’ market, but they have gained a little more advantage than they had last year. That’s evidenced by the number of listings with price reductions (35% in January), and the discounts sellers are making during negotiations. Last month buyers got an average $20,000 reduction on 41% of the sales during negotiations.  

And although you have to get into the weeds of last month’s NETAR’s market data, there’s an inventory and pending sales change that’s worth note.  

Inventory of single-family existing home in the affordable price range was up 38.5%. New listings in the affordable price range were also up. Although one-month’s data isn’t a lock on trend, it’s a hint that there’s some stabilization at play. A more detailed explanation, and the data, can be found in NETAR’s January Pending Sales Report on the association’s website at www.netar.us.  

Patience and a laser focus on local market conditions take on renewed importance this year. Expect to see state reports of some previously hot markets cooling off as the state copes with what’s expected to be a weaker economy. That probably won’t be the case in the NE TN region. In fact, there are several outlooks that point to the region gaining some added consumer preference.  

Savvy buyers will add “local, local, local” to the traditional real estate watchwords of “location, location, location” when house shopping this year. Consumers have never had as much housing market information as they now have, but the only data that makes a real difference is local.  

Look at shopping for a new home the same way you would look at the weather when planning a vacation trip. If you’re headed for the Tri-Cities region, it makes little sense to check the weather in New York City.