Housing market sees record highs but mortgage rates dip! Is it finally a good time to buy? This article explores the conflicting trends and what it means for homebuyers. The median U.S. home-sale price reached an all-time high of $394,000 during the four weeks ending June 9.
This represents a 4.4% increase from the previous year, marking the most significant rise in approximately three months. However, there are indicators that the growth in home prices might slow down soon.
According to Redfin, asking prices have plateaued, and about 6.5% of home sellers are reducing their asking prices, the highest proportion seen since November 2022. Notably, home prices are already falling in four U.S. metropolitan areas: Austin, TX, Fort Worth, TX, San Antonio, TX, and Portland, OR.
Declining Mortgage Rates Offer Potential Relief
In the meantime, the typical homebuyer’s monthly housing payment has slightly decreased to $2,829, which is $30 below the record high in April. This slight reduction in monthly payments comes despite the record-high sale prices, due to a decline in weekly average mortgage rates, which have fallen to 6.99%.
Mortgage rates are expected to continue their downward trend over the summer, potentially preventing monthly housing costs from escalating again. The daily average mortgage rates dropped to their lowest level in three months on June 12, following a Consumer Price Index (CPI) report indicating that inflation is cooling.
Although the Federal Reserve projected only one interest-rate cut this year at its June 12 meeting, it’s possible they didn’t fully account for the latest inflation data in time for the meeting, which might lead to a revised projection in their next meeting. It is important to note that daily rates have been volatile recently; they spiked following a strong jobs report before declining again.
Expert Insight on the Market
Chen Zhao, Redfin’s economic research lead, noted, “The latest inflation report is beneficial for homebuyers as it has already led to a drop in mortgage rates, though this week’s Fed meeting will likely temper further declines in mortgage rates. However, if lower mortgage rates stimulate more demand than there is supply, it could negate the potential softening of home-price growth and drive prices even higher. Ultimately, the impact of lower rates and higher prices might balance out regarding homebuyers’ monthly payments.”
Current Market Dynamics Affecting Buyers and Sellers
Currently, high costs are deterring some prospective homebuyers. Pending home sales have decreased by 3.5% year over year, marking the largest decline in over three months. Additionally, Redfin’s Homebuyer Demand Index, which measures requests for tours and other buying services from Redfin agents, has dropped by 18%, reaching its lowest point since February.
Nevertheless, there is a positive sign for demand: Mortgage-purchase applications have increased by 9% week over week. On the selling side, new listings are up by 7.8% year over year. However, these new listings remain below typical springtime levels, which is why home prices continue to rise despite the lukewarm demand.
Key Housing-Market Data
U.S. Highlights: Four Weeks Ending June 9, 2024
Redfin’s national metrics include data from over 400 U.S. metro areas, based on homes listed and/or sold during the specified period. This data provides a comprehensive look at the current state of the housing market. The following information is subject to revision.
Market Overview
- Median sale price: $393,627, a 4.4% increase year over year, reaching an all-time high. This matches the biggest increase seen during the four weeks ending April 21.
- Median asking price: $417,475, up 6% year over year.
- Median monthly mortgage payment: $2,829 at a 6.99% mortgage rate, which is an 8.6% increase year over year and $30 below the all-time high set during the four weeks ending April 28.
- Pending sales: 86,604, a 3.5% decline year over year, marking the biggest drop in over three months.
- New listings: 100,411, a 7.8% increase year over year.
- Active listings: 939,839, up 16.7% year over year.
- Months of supply: 3.2, an increase of 0.6 points. A balanced market typically has four to five months of supply; a lower number indicates seller’s market conditions.
- Share of homes off market in two weeks: 42.4%, down from 48% year over year.
- Median days on market: 31, an increase of 3 days year over year.
- Share of homes sold above list price: 32.1%, down from 35% year over year.
- Share of homes with a price drop: 6.5%, an increase of 2 points, reaching the highest level since November 2022.
- Average sale-to-list price ratio: 99.6%, a decrease of 0.3 points year over year.
Metro-Level Highlights: Four Weeks Ending June 9, 2024
The metro-level data provides insights into the housing market dynamics across the 50 most populous U.S. metros. This data highlights significant year-over-year changes in median sale prices, pending sales, and new listings, offering a detailed view of regional trends.
Metros with the Biggest Year-Over-Year Increases and Decreases
Median Sale Price
Metros with the Largest Increases:
- Anaheim, CA: 16.8%
- Newark, NJ: 16.4%
- New Brunswick, NJ: 15.5%
- Nassau County, NY: 14.6%
- San Jose, CA: 13%
Metros with the Largest Decreases:
- Austin, TX: -3.5%
- Fort Worth, TX: -2.5%
- San Antonio, TX: -1.1%
- Portland, OR: -0.9%
Note: Home prices declined in four metros.
Pending Sales
Metros with the Largest Increases:
- San Jose, CA: 12.2%
- Columbus, OH: 5.8%
- Pittsburgh, PA: 5.4%
- Milwaukee, WI: 4%
- Seattle, WA: 3.6%
Metros with the Largest Decreases:
- Houston, TX: -16.2%
- West Palm Beach, FL: -13.4%
- Fort Lauderdale, FL: -11.5%
- Atlanta, GA: -10%
- Tampa, FL: -9.9%
Note: Pending sales increased in 13 metros.
New Listings
Metros with the Largest Increases:
- San Jose, CA: 39.9%
- Phoenix, AZ: 26.1%
- San Diego, CA: 23.2%
- Miami, FL: 20.9%
- Denver, CO: 17.7%
Metros with the Largest Decreases:
- Atlanta, GA: -7.9%
- Chicago, IL: -5.1%
- Newark, NJ: -3.2%
- Indianapolis, IN: -2.8%
- Minneapolis, MN: -2.1%
Regional Insights
Rising Markets
Anaheim, CA and Newark, NJ lead with the highest year-over-year increases in median sale prices, signaling strong demand in these areas. The substantial rise in new listings in places like San Jose, CA and Phoenix, AZ indicates a growing interest among sellers to capitalize on the current market conditions.
Cooling Markets
In contrast, metros like Austin, TX and Fort Worth, TX are experiencing declines in median sale prices, suggesting a cooling market. Similarly, significant drops in pending sales in Houston, TX and West Palm Beach, FL highlight a potential slowdown in buyer activity.
Mixed Signals
While some areas see an increase in new listings, others like Atlanta, GA and Chicago, IL are witnessing declines, which could affect local inventory and pricing dynamics. The varying trends across different metros reflect the diverse conditions influencing the U.S. housing market.
The Future Outlook for Housing Market
As mortgage rates potentially decline further over the summer, this could provide some much-needed relief for homebuyers facing record-high home prices. However, the balance between demand and supply will be crucial in determining whether home-price growth will soften or if prices will continue to rise. Homebuyers should stay informed about rate changes and market trends to make well-timed decisions.
In summary, while the U.S. housing market is currently marked by record-high home prices, declining mortgage rates offer a glimmer of hope for prospective buyers. The interplay between these factors will shape the affordability and accessibility of homes in the coming months.
ALSO READ:
