Realtor.com; Getty Images (1)
Mortgage rates dipped further this week, with the average rate for a 30-year fixed home loan falling from 6.99% last week to 6.95% for the week ending June 13, according to Freddie Mac.
“Mortgage rates continued to fall back this week as incoming data suggests the economy is cooling to a more sustainable level of growth,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Top-line inflation numbers were flat, but shelter inflation, which measures rent and homeownership costs, increased, showing that housing affordability continues to be an ongoing impediment for buyers on the house hunt.”
Mortgage rates have been perched on a 7% seesaw, rising just above or below the benchmark for almost two months, presenting a major financial hurdle for would-be buyers.
Still, with just one week left in the spring housing market, many sellers are forging ahead the instant they see rates fall, as they did last week.
“This past week, mortgage rates dropped below 7% once again,” says Realtor.com® senior research scientist Jiayi Xu. “As a result, more home sellers returned to the market, leading to an increase in new listings compared to the previous week.”
Fresh listings jumped for the week ending June 8, with 8.0% more new listings hitting the market compared with a year ago. (The prior week saw only a 2.1% rise in new listings year over year.)
Here’s a breakdown of the latest housing market data and what it means for homebuyers and sellers in our most recent installment of “How’s the Housing Market This Week?”
Mortgage rates remain high
The U.S. Federal Reserve did not lower interest rates at its meeting on Wednesday, despite earlier talk of three rate cuts in 2024. (While the Fed does not directly influence mortgage rates, the two numbers usually move in tandem.)
“Chairman Jerome Powell reiterated his commitment to cautiously fight inflation despite the lowest monthly [consumer price index] report since early 2020,” says Realtor.com senior economist Ralph McLaughlin. “Chairman Powell’s comments also suggest rate cuts will be limited to just one cut later in the year.”
However, Xu cautions that even if the Fed lowers rates, it will take time for rates to come down enough to make borrowing buyer-friendly.
“In other words, while lower inflation and mortgage rates would be welcome, it’s important to note that mortgage rates are likely to remain well above the 3.5% to 5% range that prevailed for a decade before the pandemic,” says Xu.
More real estate listings are on the market
The total number of active homes for sale shot up by 36% above year-ago levels for the week ending June 8. This increase marks 31 weeks of greater housing stock than the previous year.
The spike was likely caused by last week’s drop in mortgage rates, highlighting how closely tied rates and listings are.
“With recent mortgage rates fluctuating around 7%, potential sellers are closely monitoring these changes and adjusting their listing decisions accordingly,” says Xu. “If the economy continues to show signs of slower growth and lower inflation, it could lead to softening rates, potentially resulting in an increase in new listings in the coming weeks.”
Many of these homes are smaller, budget-friendly listings located in the South, which saw a 47.2% year-over-year increase in listing levels in May.
Home prices remain flat
What didn’t rise or fall for the week ending June 8? Home prices, which remained steady year over year.
This is good news for homebuyers who faced median home prices inching up in late May.
“The upward trend in home prices has been anchored as of late by more affordable homes hitting the market compared to the year prior,” explains Xu.
Another factor tamping down prices is the rise in overall housing stock, providing buyers with more options.
The pace of sales slows down
Buyers did not snap up homes as quickly for the week ending June 8 as they did last year, with homes spending two days more on the market compared with the year prior.
Since March, the time a home stays for sale has toggled within a two-day range of the year-ago level.
Blame high home prices and mortgage rates for homes languishing “as the market struggles to pick up steam amid still-high prices and mortgage rates,” says Xu.
However, Xu adds, “though homes are selling a little more slowly, they are still selling more quickly than pre-pandemic times as the inventory of homes for sale works back toward pre-pandemic levels.”