I’m the chief economist of Redfin. 5 things to know about the housing market now

Peak home-buying season is in full swing, and many aspiring buyers are wondering: What should I know about the housing market if want to buy? After all, interest rates have been rising, with some pros saying that trend will continue (see the lowest mortgage rates you can qualify for here); home prices keep climbing; and there aren’t enough houses on the market to meet buyers’ demand. So we asked Daryl Fairweather — Redfin’s chief economist, who also worked at the Boston Fed studying why homeowners enter foreclosure — to share her projections and thoughts for what buyers and sellers can expect in the coming months.

There are early signs that the market, in some places, is cooling a bit

Fairweather says we’re seeing early signs that the housing market is starting to cool, at least in pricey coastal metros. “Buyers in markets like Los Angeles, San Francisco, Boston and Seattle who have lost out on several bidding wars may find they’re facing less competition from other buyers than they were a month or two ago,” says Fairweather.

Also see: This story is part of a series where we ask prominent real-estate economists about the housing market. Here’s what the senior economist for Realtor.com told us about the housing market now.

For this reason, if you’re a local house hunter in a popular migration destination like Nashville, Tenn.; Atlanta; or Miami, you should expect competition from California and New York buyers who tend to have bigger housing budgets. “In Nashville, the average out-of-towner has a housing budget that’s nearly 30% higher than the average budget for local buyers,” says Fairweather.

Mortgage rates may continue to rise in the near term

It’s no secret that interest rates are climbing fast — and, thanks to soaring rates as well as rising home prices, monthly mortgage payments are up 30% from a year ago. “I expect rates will continue to rise in the near term so buyers who don’t yet have a mortgage rate locked with a lender should factor that into their budget,” says Fairweather. (See the lowest mortgage rates you can qualify for here.)

Home-price growth may slow soon

As for home-price growth, she expects a slowdown soon, given rising mortgage rates. “I don’t think home prices will go down, but buyers might be relieved to know that the double-digit year over year price growth we’ve been experiencing is likely to drop into the single digits in the coming months,” says Fairweather.

But this won’t be universal in every market: Popular Sun Belt migration destinations are likely to be the most resilient, meaning price growth will likely continue, but, in general, home-price growth will start to balance out, according to Fairweather

Rents are also very high, so this might not be the best time to move

Buyers who are currently renting should also beware that rental asking prices are soaring. “They were up 17% nationwide in March and as much as about 40% in places like Austin, Texas, and Portland, Ore. If you decide to pause your home search for any reason, staying in your current lease could be a better option than moving to a new rental home,” says Fairweather. This is because, she says, landlords are generally less likely to raise rents as aggressively for existing tenants as they do on newly vacant units.

Focus on what matters when buying a house

In this tough market, Fairweather recommends home buyers not get hung up on cosmetic details that are relatively easy to replace or repair like paint color, cabinet hardware, outdated appliances and light fixtures. “It can lead to a lowball offer on a house that would otherwise check all your boxes, and, in a market where about two-thirds of offers face bidding wars, it can cost you the home,” says Fairweather. Instead, focus on the things that matter more, like location, square footage and layout — you can make cosmetic changes anytime once you own the home.