The U.S. real estate market has experienced a slowdown in 2022, thanks to higher interest rates and ongoing inflation concerns that have taken a toll on the economy. The result is a smaller number of people buying and selling in the housing market.

While this may not yet be a buyer’s market, the good news is that buyers have options that make it a good time to shop for their dream home. And even if sellers missed out on the red-hot housing market’s multiple bids for homes, they will find that sale prices continue to outpace prior years in many areas.

The overall news about the nation’s economy may not sound good, but many factors can make buying or selling a home now the right decision.

Why Now Is the Time to Buy a Home

There are many reasons to consider buying a home now, despite the turbulent economic conditions.

First, renters face sharp increases in their monthly payments and most tenants expect their rents to rise sharply over the next year, according to Fannie Mae’s National Housing Survey. More than 60% of renters who responded to the survey said they would buy a home now if their lease ended. The average increase in rent across the nation’s apartments in July 2022 jumped about 13.5% year-over-year, with median monthly rent at $2,032, according to a report from Redfin.

The nation’s fall housing market appears to be shifting in favor of single-family home buyers.

Mortgage Rates That Rise Must Come Down

The good news about mortgage rates rising fast is that they will likely drop fast, too. In the three weeks leading into fall, conventional 30-year fixed rate mortgage rates rose 0.76 percentage points. That was the 15th-highest mortgage rate increase over the past five decades, and a sign of the difficulties buyers faced over the summer.

Some experts estimate that mortgage rates may already have reached their peak, and that could mean that interest rates on home loans could be on the downswing. While interest rates are not expected to get to the January 2022 level of 3 percent, it could mean better interest rates in the months ahead for buyers.

With conventional 30-year mortgage rates at their highest levels since 2008, the adjustable rate option offers a more affordable payment thanks to the lower introductory interest rate. But this type of home loan can be tricky. If the borrower does not refinance before the higher interest rate kicks in, monthly mortgage payments can increase sharply.

Buyers Face Less Competition For Homes

More good news from a cooling housing market: fewer buyers are competing for homes than in 2021. There are still plenty of homes for sale, according to the National Association of Realtors. The group of real estate professionals says more homes are listed for sale than at any other time over the past 12 months. The group also says those homes are receiving half as many offers as they did earlier in 2022.

The result is buyers benefit. The shift in competition means that buyers do not have to offer more than asking price for a home. They can even consider offering under asking price.

During the hottest periods in 2021 of the real estate market, many buyers waived adding important contingencies in their offers because competition for houses was so high. That meant many didn’t make their purchase offers contingent on a home appraisal, mortgage approval or a home inspection. But these days, sellers are more willing to negotiate such options.

Home Sellers Are More Willing To Drop Prices

It is so much easier to shop in a real estate market where sellers actually drop prices. During the 2021 highs in the market, many buyers watched as sellers RAISED listing prices as the market quickly appreciated with high buyer demand and low housing inventory. That’s not the case anymore.

As 2022 progressed, sellers found themselves lowering their asking price. Going into the fall, nearly half of all residential home sellers lowered their asking price, which is about one-third more than is usual, according to Altos Research. There are still homes on the market that are overpriced. But sellers with those listings typically find themselves lowering the price within 14 days.

Why Now Is the Time to Sell a Home

With so much equity growth in homes over the past few years, many owners are considering selling. But with all the dire economic news about the cooling real estate market, many sellers are nervous.

Finding the right time to sell relies on more than just rising home prices, buyer demand and interest rate growth. Sometimes an owner wants to sell and downsize into a smaller house. Sometimes an owner wants to tap into that equity growth their home experienced.

According to the most recent Fannie Mae Home Purchase Sentiment Index, more than half (51%)  of consumers believe now is the right time to sell. There are several key reasons.

Buyer Demand For Houses Remains Strong

The housing inventory problems of 2021 that led to record increases in home prices continue to impact the 2022 real estate market. Although home sales have cooled, housing inventory continues to lag. The supply has not improved enough to replenish inventory, which means that sellers can still price their home well for those buyers who are looking. One problem impacting supply is the high cost of construction in 2022 that came as a result of supply chain troubles that choked access to materials.

Don’t Gamble on Interest Rates Dropping

While higher interest rates may reduce the number of buyers looking for homes, today’s rates may still be lower than tomorrow’s. If you know you will have to sell in the next one to two years, you should not wait for lower borrowing rates to attract more buyers. Sell your property as soon as possible to avoid any negative impact that may come from rising interest rates that may come in the weeks and months ahead.