Despite pending home sales falling by 4.3% and new listings remaining flat, a recent dip in mortgage rates brings hope for potential homebuyers.
This week’s softer-than-expected inflation report caused mortgage rates to dip below 7% for the first time in over five weeks, potentially offering relief in a tough housing market.
Key Housing Market Trends
- Pending Home Sales: Down by 4.3% year-over-year during the four-week period ending May 12. This marks the biggest decline in about three months and is unusual for early May.
- New Listings: Although up by 10% year-over-year, new listings have plateaued compared to the previous week—an unusual trend for this time of year when listings typically rise.
- Home Prices: The median home-sale price hit a record high of $386,951, showing a 4.7% increase year-over-year.
- Mortgage Payments: The median monthly mortgage payment now sits at $2,858, just $26 shy of the all-time high set last month.
However, affordability is beginning to improve slightly as mortgage rates drop, and home sellers are more open to negotiations.
Buyers may be able to secure homes at lower prices, especially those looking at fixer-uppers.
Mortgage Rates & Housing Affordability: Key Data
| Metric | Value | Change | Notes |
|---|---|---|---|
| 30-Year Fixed Mortgage Rate (Daily) | 6.99% (as of May 15) | Down from 7.52% three weeks ago | Lowest since early April |
| 30-Year Fixed Mortgage Rate (Weekly) | 7.09% (week ending May 9) | Down from 7.22% previous week | Slight drop from 7.22% |
| Median Sale Price | $386,951 | +4.7% from last year | All-time high |
| Median Asking Price | $418,455 | +6.6% year-over-year | Highest level ever recorded |
| Mortgage-Purchase Applications | Declined 2% from the previous week | Down 14% year-over-year | Mortgage Bankers Association |
| Pending Sales | 90,457 | -4.3% year-over-year | Largest decline in three months |
Impact of Mortgage Rate Decline
The recent decline in mortgage rates may encourage more buyers to enter the market, especially given that sellers are increasingly offering price reductions.
Currently, 6.3% of homes have dropped their prices, the highest rate in over a year.
This provides more opportunities for buyers to negotiate, especially if they’re willing to buy a home in need of repairs.
For Buyers:
- Expect to see negotiations and offers coming in below the asking price.
- This may be a good time to purchase a fixer-upper as those homes tend to stay on the market longer, providing better opportunities for price reductions.
For Sellers:
- Be prepared for negotiations.
- Understand that high mortgage rates are causing buyers to be more cautious, so expect offers that may come in lower than your asking price.
Metro-Level Highlights
| Metro Area | Median Sale Price Year-over-Year Change | Pending Sales Change | New Listings Change |
|---|---|---|---|
| Detroit, MI | +18.8% | +16.6% | +40.2% |
| Anaheim, CA | +18.6% | +9.2% | +26.4% |
| West Palm Beach, FL | +16.2% | -11.8% | +24.7% |
| San Jose, CA | +13.6% | +5.3% | +24.6% |
| San Antonio, TX | -0.5% | -14.9% | -3.1% |
Conclusion
The housing market is seeing some positive movement despite ongoing challenges.
With mortgage rates dipping below 7%, there’s a potential for buyers to return, and sellers may need to adjust expectations.
While the market remains tough, these changes offer a glimmer of hope for those looking to buy or sell in the coming months.