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Mortgage rates dipped below 7% this week, with the average rate for a 30-year fixed home loan falling from 7.03% last week to 6.99% for the week ending June 6, according to Freddie Mac.
“Mortgage rates retreated this week given incoming data showing slower growth,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Rates are just shy of seven percent.”
Mortgage rates have been in a rerun loop for almost two months, toggling just above or below the 7% benchmark.
Yet stubbornly high rates aren’t causing a complete June gloom in the real estate market. The number of homes for sale grew 35.5% above year-ago levels for the week ending June 1.
“Inventory levels continue to rise by about 30% year-over-year,” says Realtor.com® senior economist Ralph McLaughlin. “This means buyers are sitting in a bittersweet market right now. They have the most options since before the COVID-19 pandemic but are stymied because of rising prices and stubbornly high mortgage rates.”
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 and the economic outlook
Last week, mortgage rates climbed back over 7% after falling to 6.94%, “keeping many buyers in a holding pattern as they wait for progress towards affordability,” says Realtor.com senior economic research analyst Hannah Jones in her latest analysis.
All real estate economists are watching upcoming economic reports for an indication of when rates may budge. On Friday, the jobs report will indicate how strong the employment market is and, therefore, the economy. If job growth softens, the Federal Reserve may lower rates, which would in turn likely bring down mortgage rates.
“And next week’s CPI inflation data has the potential to lead to softening rates, which could mean a pickup in new listing activity in the coming weeks,” says Jones.
McLaughlin adds: “Overall, we anticipate inflation will continue to slow and will allow mortgage rates to decrease to around 6.5% by the end of 2024 or early 2025.”
Home prices remain flat
Home listing prices remained flat year-over-year for the week ending June 1. (In May, the median home cost $442,500.)
“In recent months, listing price growth has remained muted as a greater share of more affordable homes were available for sale compared to the same time last year,” says Jones. “Home inventory, despite gains compared to last year, still remains below pre-pandemic levels and continues to provide a floor to listing prices.”
What did grow is the median listing price per square foot, which increased by 3.7% for the week ending June 1 compared with the same week last year.
Housing stock is up
The number of homes actively for sale continued to grow in May, with buyers seeing 35.5% more homes for sale for the week ending June 1 than last year.
“For the 30th straight week, there were more homes listed for sale versus the prior year, giving homebuyers more options,” says Jones.
Booming housing markets in the South—which saw a 47.2% year-over-year increase in inventory in May—are largely behind ballooning housing stock. These homes in Southern markets are generally small yet affordable.
Fresh listings were also up by 2.1% for the week ending June 1 compared to the previous year. Yet, the new listing growth rate slumped from 3.6% the previous week.
“The recent climb in mortgage rates tempered seller activity over the last few weeks as homeowners held off, likely hoping that mortgage rates will fall once again in the coming months,” says Jones.
The pace of home sales
The typical home for sale spent one more day on the market for the week ending June 1 compared to last year. (The average home spent 44 days on the market this May.)
Since March, the average time a home lingers on the market before being snapped up has been within a two-day range compared to the same time last year.
“However, 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 towards pre-pandemic levels,” says Jones.