The U.S. housing market is finally starting to see an uptick in listings after a long period of inventory stagnation, but right now, many places are just not seeing any buyers.
Sellers are struggling with the fact that prolonged periods of high interest rates are stifling demand at a critical time for the market. And many of those owners are Disconnect As inventory ages, asking prices are at their highest since November 2022, according to Redfin.
“With mortgage rates back above 7%, people are less willing to buy a home this season,” said Ralph McLaughlin, senior economist at Realtor.com. “You can choose between high home prices or high mortgage rates, but you can’t have both for long.”
Earlier this year, the prospect of interest rate cuts by the Federal Reserve sparked some optimism at a time when the housing market was just emerging from the crisis. worst Existing home sales are at their lowest in 30 years, but the economy remains strong, fading hopes that interest rates will be cut anytime soon.
“Without interest rate cuts, the housing market is going to face some harsh reality,” said Robert Frick, corporate economist at Navy Federal Credit Union.
Buyers are seeing little to no relief from high borrowing costs. The average interest rate on a 30-year mortgage has remained near 7% since mid-April, and prices continue to rise. In the four weeks ending May 26, the average sales price was Up According to Redfin, that figure increased 4.3% from a year ago to a record high of $390,613.
Homebuyers of all kinds are being shut out of the market. New home sales, a bright spot in a market with limited inventory, are fell April. A contract was signed to purchase an existing home that month. Depressed Real estate prices have fallen to their lowest level in four years, and Realtor.com’s McLaughlin says that drop is causing listings to pile up rather than being matched with buyers.
Lawrence Yun, chief economist for the National Association of Realtors, said the spring home selling season so far has been “definitely disappointing.” “At the beginning of the year, we thought we would see sales increase throughout the year.”
Nationwide
Sales are down on average across the U.S., but geography is also a factor: Sunbelt markets like Florida and Texas that boomed during the pandemic due to an influx of new residents are now cooling as soaring prices make it harder for people to afford them, according to Redfin. Meanwhile, major Western metropolitan areas like Seattle and the San Francisco Bay Area have seen bigger corrections in the second half of 2022 and are already starting to recover.
Houston, West Palm Beach, Florida and Atlanta saw declines of at least 14 percent in contract signings, Rapid increase San Jose, California, saw a roughly similar drop in pending sales, according to year-over-year data from Redfin for the four weeks ending May 26. Nationally, pending sales fell 3.4%, as measured by Redfin.
Don Hackford, a real estate agent in Hendersonville, Tennessee, said that 18 months ago, homes in his fast-growing suburb north of Nashville wouldn’t even sell for a day. Now, he just took two homes off the market after his developer clients received low offers.
“It feels like everything is at a standstill and it’s frustrating for real estate agents. It feels like we’re being shut out,” Hackford said. “There’s no work.”
A booming coastal region in Southwest Florida A big blow The number of single-family homes currently for sale in the Punta Gorda area has doubled in the past year to 2,143 due to rising home insurance costs, while the average sales price of a single-family home fell nearly $30,000 in April from a year ago to $351,000, said Leanne Walker, president of Punta Gorda-Port Charlotte-North Port-DeSoto Real Estate and a local real estate broker.
“It’s really flattening out,” Walker said. “It’s a total buyer’s market. We’re seeing price cuts all the time.”
Redfin economist Chen Chao said price growth could slow more broadly in the coming months, but the slowdown is likely to be gradual, given that pent-up demand from millennials is set to continue to drive the market higher.
“The consensus was that interest rates would have eased by now, which would have increased demand and supply, and led to increased transaction volume,” Redfin’s Chao said. “But in reality, they’re still struggling near the troughs they reached about 18 months ago.”
