The historically busy summer real estate market is officially here, and with it comes a double dose of good news for buyers.
Mortgage rates fell for the third week in a row, hitting 6.67% for the average 30-year fixed-rate mortgage for the week ending June 22, according to Freddie Mac. That’s down from the previous week’s 6.69%.
And buyers can continue to celebrate last week’s significant milestone in home prices, when median listing prices declined for the first time in Realtor.com® data history (dating to 2017). And for the week ending June 17, prices declined even further by 0.9% from what they were a year earlier.
So what does this portend for buyers in today’s largely unforgiving real estate landscape? We’ll break down what the latest housing data means for homebuyers—and sellers—in our latest installment of “How’s the Housing Market This Week?”
Mortgage rates and home prices show slow and steady declines
On a micro level, mortgage rates barely ticked down week over week. But on a macro level, rates are down 0.12% since the week ending June 1, when rates were 6.79%.
And joining the real estate market’s inch-by-inch march toward affordability is the decline in median home prices, “with the typical asking price registering just less than 1% lower than one year ago,” notes Realtor.com Chief Economist Danielle Hale in her weekly analysis.
Last June saw median home prices hit an all-time high of $449,000—but as of May, that number has dropped to $441,000.
As Hale puts it, any decline is a welcome “listing-price relief” to cash-strapped buyers. However, “buying costs are still elevated.”
The reality check for new sellers
The decline in median home prices can be partly chalked up to sellers reducing asking prices on stale properties.
“This is a sign that home sellers are reacting to shifting market conditions and are at least somewhat aware that still-high mortgage rates mean higher monthly housing costs for buyers,” explains Hale.
Yet the fact that home prices are no longer rising might discourage some new sellers who were hoping to cash in on record-high home equity.
“In many respects, new sellers are catching up to the reality that recent sellers have already accepted,” adds Hale.
New listings continue to dwindle
Real estate’s less-rosy home-selling reality could be stopping some sellers from listing their homes entirely.
The week ending June 17 marked a grim milestone when it comes to new listings. For 50 weeks now, fewer homes have hit the market—down 26%—than at the same time last year.
“A smaller number of homeowners are choosing to list homes for sale, limiting the number of cumulative options that home shoppers are likely to see throughout their search,” says Hale.
Despite the lack of new listings for buyers to peruse, active inventory (a combination of new and existing listings) grew by 5% annually for the week ending June 17. Yet overall, that active inventory growth has slowed.
The homes that make up that inventory spent 12 more days on the market for the week ending June 17, compared with the same week last year. That marks 48 weeks that it’s taken longer to sell a home. (In May, homes were on the market for an average of 43 days.)
‘Lower prices, fewer homes for sale’
While the pool of homes for sale continued to grow last week, the overall outlook for summer homebuyers looking for plenty of properties to choose from isn’t great.
In a nutshell, the number of homes for sale shot up in 2022, when mortgage rates were just beginning to climb—and buyers and sellers were desperate to lock in a low mortgage rate. Today, homeowners have less incentive to sell.
“This is a contributor to the big shift in expectations we have for inventory in 2023, which will likely decline for the year as a whole,” says Hale.
As for the near real estate future, she expects “lower prices, fewer homes for sale, and a somewhat slower pace of home sales than we originally projected in December.”