T
he real estate market has been stuck in a frustrating cycle of high mortgage rates, low inventory, and affordability challenges. However, recent economic data suggests that the landscape may be shifting, potentially providing a glimmer of hope for buyers and sellers.

    Recent GDPNow tracker projections from the Atlanta Federal Reserve have reversed course, forecasting a 2.4% contraction instead of 2.9% growth in the first quarter. This unexpected shift has left analysts reassessing their economic projections. Several factors are contributing to this change:

    * Consumer spending is slowing, with Americans cutting back on spending at the fastest rate in four years.

    * The job market is showing cracks, with jobless claims increasing and fewer jobs added than expected.

    * Pending home sales hit a record low in January, possibly due to affordability challenges.

    * Confidence is slipping, with the Consumer Confidence Index falling by seven points.

    Policy decisions from Washington are driving much of this uncertainty. President Trump's spending cuts, workforce reductions, and tariffs on imports may drive inflation higher, but investors are currently more concerned about economic growth. A softening economy could put downward pressure on interest rates, enhancing affordability for homebuyers who have been priced out of the market.

    We're already seeing early signs of a market shift. Investors are moving their money into safer assets like U.S. Treasury bonds, pushing yields lower and mortgage rates down. The 30-year fixed mortgage rate has dropped to 6.79%, offering some relief for buyers. If the economy continues to demonstrate signs of softening, mortgage rates could benefit from further money flowing into Treasuries.

    However, lower rates won't fix everything. Buyers still need homes to purchase, and in Rochester, there aren't many available. The current inventory is extremely low, with only 112 existing single-family homes priced above $200,000 available for sale in Monroe County. This represents just .73 months of supply, making it a highly competitive market.

    The "lock-in effect" has kept many homeowners from listing their properties, contributing to the housing shortage. However, early signs suggest its grip may be loosening, and national trends tend to manifest themselves locally with time. If mortgage rates continue downward and more homeowners decide to list, Rochester's market could finally see some relief.

    The question is whether this year will follow the traditional pattern of new listings hitting the market in March or remain constrained by low inventory and economic uncertainty. Either way, staying informed will be key for those looking to navigate what's next in real estate.