Mortgage interest rates have slowly trickled down slightly
Good Monday Morning!
There is a slight bit of welcome news in the world of Real Estate. Mortgage interest rates have slowly trickled down slightly. In this housing market, any news like this is welcome. The lower mortgage interest rates will certainly help, but the other issues that continue to haunt the housing market are that home prices have not come down enough to make a real difference, and the overall national economy, along with inflation numbers, has not changed. This has led to a consumer confidence crisis that may stick around for a while. Never the less, home sales are still taking place in the Eugene and Springfield area and even though the market here may be slower than several months ago, I still believe that it is a good time to sell your home. The following is a recent article from "Realtor.com" that talks about where our national housing market is today.
Mortgage rates sank further this week, with the average rate for a 30-year fixed home loan falling from 6.87% last week to 6.86% for the week ending June 27, according to Freddie Mac.
“The 30-year fixed-rate mortgage continues to trend down, hitting the lowest level in almost three months,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
Despite the slight tick down, the consistently high mortgage rate has effectively put the housing market in a holding pattern for months, leaving potential buyers and sellers in limbo.
Real estate experts agree the market can’t seem to move forward lately, with economists at Bank of America remarking this week that the housing market is “stuck and we are not convinced it will become unstuck until 2026 … or maybe even later.”
A recent Gallup poll also found that just 21% of Americans think it’s a good time to buy a house—tied as the worst reading in the record’s history—while 76% said it’s a bad time to buy.
What will it take to jump-start the market? Significantly lower mortgage rates.
“Although mortgage rates continue to trend lower, the declines have not yet been big enough to have an impact on most housing metrics,” says Realtor.com® Chief Economist Danielle Hale in her latest analysis. “The key weekly data we track has been remarkably stable relative to the prior June, with pricing flat, listings up, and time on market somewhat slower.”
Here’s a breakdown 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?”
The mortgage rate doldrums
Mortgage rates are on a continued long run of remaining stubbornly high.
The Federal Reserve, which was once poised to cut base interest rates three times this year, expressed reluctance to do so at its last meeting. (Though mortgage rates aren’t tied to interest rates, the two numbers generally move in the same direction.)
That leaves the future of mortgage rates teetering on coming economic reports. If inflation falls to a certain point, the Fed will likely cut rates. If inflation rises more than expected, rates will likely remain the same or perhaps even rise further.
“For home shoppers and sellers, peak mortgage rates are likely behind us, but the risk of volatility remains, complicating moving decisions,” says Realtor.com economist Jiayi Xu. “In addition, with only one rate cut expected before the end of 2024, relief may come too little and too late for many first-time homebuyers.”
Home prices remain unchanged
The median list price remained the same compared with the previous year for the week ending June 22, marking the fourth week in a row when the home list price matched the exact level as the prior year. (In May, the median home cost $442,500.)
The good news is that while the median home price remains high, according to Hale, there are “more abundant affordable options” on the listing pages these days.
“In recent months, a growing share of smaller homes on the market have helped keep the market median price in check even as the price per square foot continued to rise,” explains Hale.
Housing stock rises
One housing data point that did see real movement for the week ending June 22 was housing stock, with fresh listings rising by 7.4% compared with the year prior.
Overall, the total number of homes for sale (including newly listed and those that have lingered on the market) jumped 36.1% above year-ago levels, marking 33 weeks in a row with an increase in the number of listings.
“Seller activity is up compared to one year ago, but momentum has waned from recent weeks and earlier this year,” says Hale.
Indeed, active inventory in May was down more than 30% from typical pre-pandemic levels.
Getting more sellers to list their homes depends on when mortgage rates start to cool. Realtor.com analysis shows that 87% of outstanding mortgages have a rate below 6%, meaning many homeowners are reluctant to trade in a low rate for a higher one if they become buyers.
“If these homeowners sell, they are relinquishing relatively inexpensive debt for today’s roughly 7% mortgage rates, a costly proposition,” says Hale. “As rates ease, they will cause less drag on the ‘move or stay’ calculus, and we are likely to see an increase in seller interest.”
Homes are lingering longer
Real estate listings sat on the market longer for the week ending June 22 compared with this time last year.
“The typical home for sale spent two more days on the market this past week compared to last year, continuing the trend observed in recent weeks,” says Hale. “Longer time on market means selling may require more patience while buyers may have more time to make a decision, a buyer-friendly trend.”
Some buyers might be waiting out the market, hoping for lower mortgage rates and lower prices before they pounce.
Have An Awesome Week!
Stay Healthy! Stay Safe! Remain Positive! Trust in God!
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