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Mortgage rates ticked back up this week, with the average rate for a 30-year fixed home loan jumping from 6.86% last week to 6.95% for the week ending July 3, according to Freddie Mac.
“Mortgage rates increased this week, coming in just under seven percent,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “We are still expecting rates to moderately decrease in the second half of the year and given additional inventory, price growth should temper, boding well for interested homebuyers.”
The consistently high rates of the past few months effectively chilled the normally hot spring market, with buyers and sellers sitting out the season.
Yet the summer market may just heat up—if not quite sizzle—depending on where rates continue to land.
“Price growth and new listing growth both picked up compared to the previous week, suggesting an uptick in both buyer and seller activity,” says Realtor.com® Sr. Economic Research Analyst Hannah Jones in her latest analysis. “Moving forward, a downward mortgage rate trend could stoke seller activity and take some pressure off of prices, making the market more hospitable for buyers this summer.”
Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest installment of “How’s the Housing Market This Week?”
Slight mortgage rate fluctuations matter
Despite rates getting dangerously close, mortgage rates have not risen above 7% for five weeks now. All eyes will continue to watch rates as even the smallest change moves the market.
“Rates have eased nearly four-tenths of a percentage point since early May, and this week’s data shows that the housing market may be starting to respond,” says Jones.
Why do such small rate adjustments make such a difference? Likely because mortgage rates have hovered above 6% since the fall of 2022, “which has stifled seller activity and made homebuying a daunting prospect,” according to Jones.
The 6% mark is important to note as a whopping 90% of homeowners currently enjoy that rate or one that’s much lower. So until rates fall near or below that benchmark, the market will remain sluggish—and responsive to any small rate drops. At this point, any movement south on rates causes a ripple.
A bigger change in rates may come later in the year.
“Falling inflation and employment could mean the Fed cuts interest rates earlier in the fall and that borrowers may start to see some relief from high borrowing costs,” says Jones.
Home prices are up
After four straight weeks that saw home price growth trend at 0% or close to it week to week, listing prices have ticked up by 0.5% for the week ending June 29.
“Months of growing affordable inventory has kept home price growth low, despite still-climbing prices on a per-square-foot basis,” says Jones.
It’s important to note, however, that the affordable housing stock is for smaller homes meaning homebuyers are paying less for less square footage.
“In general, similar-sized homes are more expensive than they were a year ago,” says Jones.
The number of homes for sale continues to swell
As noted, even tiny changes in mortgage rates are shifting the market these days, with Jones noting that “seller activity picked up momentum” for the week ending June 29.
“Recently falling mortgage rates may be encouraging more homeowners to list their home for sale,” Jones explains.
Case in point: Fresh listing were up by 10.8% compared to the year prior. The increase is the largest of any week since late April.
Overall listing levels (of both new-to-market and lingerers) also ballooned by 38.1% for the week ending June 26 compared to the same time last year, marking 34 weeks in a row of growth.
Moreover, Jones says the past week of rising housing stock notched “the largest annual increase since April 2023.”
Yet in the bigger picture, there are still 30% fewer homes for sale compared to pre-pandemic.
The pace of the market slows
Homes lingered two extra days on the market for the week ending June 29 compared to the same time last year.
The combination of high mortgage rates and high home prices has kept many buyers on the sidelines weighing their options.
“Longer time on market means selling may require more patience while buyers may have more time to make a decision, a buyer-friendly trend,” says Jones.