The Impact of Mortgage Rates on Pittsburgh Housing Market

The Pittsburgh housing market has experienced its fair share of ups and downs in recent years. One of the key factors that influences the market is the prevailing mortgage rates. As mortgage rates fluctuate, they can significantly affect the affordability of homes and influence buyers' decisions. In this article, we will reflect on the historical data of conventional 30-year home mortgage rates from January 2018 to July 2023 and explore its impact on the Pittsburgh housing market.

The above graph shows the historical 30-year mortgage rate dating back to 1971

During the period under review, the mortgage rates witnessed several fluctuations. In early 2018, the rates were relatively low, with the 30-year mortgage rate hovering around 3.95%. Over the next few months, rates continued to rise gradually, reaching a peak of 7.08% in October 2022. Since then, rates have seen some moderation, but they remained elevated compared to previous years, with the latest rate recorded at 6.81% in July 2023.

The impact of these rate fluctuations on the Pittsburgh housing market can be observed by analyzing two key indicators: days on market and active listings. Days on market refer to the average number of days it takes for a home to sell after being listed on the market. Active listings represent the number of homes available for sale at any given time. Reflect back on my past articles for more information in these areas the Pittsburgh Housing Market.

When mortgage rates are low, it generally stimulates housing market activity as more buyers enter the market due to increased affordability. Lower rates reduce the cost of borrowing, making homeownership more attainable for a larger pool of potential buyers. As a result, we often see a decrease in days on market and a higher number of active listings.

Conversely, when mortgage rates rise, the cost of borrowing increases, potentially discouraging some buyers from entering the market. This can lead to an increase in days on market and a decrease in active listings. Buyers may take longer to make purchasing decisions or opt to wait for rates to stabilize before committing to a mortgage.

Analyzing the historical data, we can observe some patterns in the Pittsburgh housing market in relation to mortgage rate fluctuations. In early 2018, when rates were relatively low, we witnessed a surge in housing market activity. Homes sold quickly, with shorter days on market, and the number of active listings remained robust.

As rates began to rise in late 2018 and throughout 2019, the market experienced a gradual shift. Days on market started to increase, indicating a slowdown in the pace of home sales. Additionally, active listings began to decline as potential sellers may have hesitated to put their homes on the market due to a potentially smaller pool of buyers.

The impact of rising rates became more pronounced in 2020, particularly with the onset of the COVID-19 pandemic. Uncertainty and economic challenges influenced both buyers and sellers, contributing to longer days on market and a decline in active listings. However, the market started to rebound in the latter half of 2020 and early 2021 as rates dropped to historically low levels. The combination of low rates and pent-up demand resulted in increased buyer activity, shorter days on market, and a rise in active listings.

In the most recent period from 2021 to 2023, rates have shown a gradual upward trend. While still relatively low compared to historical averages, the higher rates have had some impact on the Pittsburgh housing market. Days on market have slightly increased, indicating a shift towards a more balanced market where buyers have more time to consider their options. Active listings have also seen a modest decline, suggesting a slowdown in the supply of homes for sale.

It's important to note that mortgage rates are not the sole factor influencing the Pittsburgh housing market. Other factors, such as local economic conditions, job growth, and affordability, also play significant roles. However, mortgage rates remain a crucial component, as they directly impact the cost of financing a home purchase.

As we look ahead, it will be interesting to see how the Pittsburgh housing market evolves in response to potential changes in mortgage rates. Prospective buyers and sellers should keep a close eye on these rates and work with knowledgeable real estate professionals who can provide guidance tailored to their specific circumstances.

The fluctuations in mortgage rates have had a discernible impact on the Pittsburgh housing market in recent years. As rates rise, the market tends to experience a slowdown, with longer days on market and a decrease in active listings. Conversely, lower rates stimulate market activity, resulting in shorter days on market and an increase in active listings. By closely monitoring mortgage rates, buyers and sellers can make informed decisions and navigate the dynamic housing market more effectively.

In conclusion, as Pittsburgh's real estate landscape continues to evolve, staying informed about pricing trends and market dynamics is essential. It is advisable to consult with a qualified real estate professional like myself to navigate the intricacies of the Pittsburgh housing market and make well-informed decisions.