One of the housing market’s biggest problems over the past 18 months has been a shortage of supply.
That problem appears to be easing a bit.
Active home listings surged 29% year over year in the week ended July 16. That about matches the numbers from the prior two weeks, according to Realtor.com.
To be sure, new listings dipped 3% year over year in the latest week, following a 6% drop in the week ended July 16. So inventory appears to be growing due to sluggish sales, not to homeowners eager to sell.
“We’ve now seen two consecutive weeks of fewer homeowners deciding to sell,” said Realtor.com Chief Economist Danielle Hale.
“Fortunately for buyers, the dip got smaller, but it will still be an important indicator to watch closely. If seller participation loses significant momentum, the trend toward market balance could be thrown off.”
Mortgage Rates Surge
Prospective sellers may be turning reluctant as soaring mortgage rates push some buyers out of the market, Hale said.
“Still, homeowners trying to decide if now is the time to list are still in a good position in many markets, as a decade of rising home prices gives them a substantial equity cushion and homes continue to move quickly.”
As for mortgage rates, the 30-year fixed-rate mortgage averaged 5.54% as of July 21, twice the 2.78% of a year earlier, Freddie Mac reported.
“The housing market remains sluggish as mortgage rates inch up for a second consecutive week,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
“Consumer concerns about rising rates, inflation and a potential recession are manifesting in softening demand. As a result of these factors, we expect house-price appreciation to moderate noticeably.”
Rising Home Prices
Speaking of prices, the median existing-home sales price hit $416,000 in June, jumping 13.4% from a year earlier, according to the National Association of Realtors. That represents 124 straight months of year-over-year increases, the longest streak on record.
So it’s no surprise that in 38 of the 50 largest U.S. metropolitan areas, the monthly cost of renting a home was lower than buying a starter home in June, as Realtor.com reported.
The median U.S. rental price hit a record (for the 16th consecutive month) of $1,876 in June. The monthly cost for starter homes totaled $2,437, or 30% higher than rent.
“This is a stark difference from earlier this year,” said Realtor.com economists Joel Berner and Hale. “When we conducted this same analysis in January, just 24 markets favored renting.”
They said the “biggest driver is that the cost of financing a home purchase has skyrocketed in the first half of the year.” Berner and Hale said. The average 30-year fixed mortgage rate was 3.45% in January.
So the housing market appears stuck in a bad place.
