America’s real estate market has hit so many record-breaking “firsts” of late, it’s logical to think this can’t go on. But recent housing data reveals yet a new twist that economists haven’t seen in two whole years.
“How’s the Housing Market This Week?” is our weekly column where we deliver the most up-to-date statistics on four crucial indicators: home prices, number of new listings, total days on the market, and mortgage rates.
Homes are taking longer to sell
For the week ending July 30, the most noteworthy shift involves how long homes are taking to sell, with properties lingering on the market one day more than they did the same week last year.
While one extra day might not seem like much, it’s a pivotal turning point after two straight years of buyers watching this window of opportunity grow smaller and smaller, week after week. Currently, listings linger a mere 32 days before getting snapped up, almost half the time it took two years earlier.
“This week’s data marks the first year-over-year increase in time on market in over two years,” notes Realtor.com® Chief Economist Danielle Hale in her analysis.
Frazzled homebuyers, no doubt, will be relieved to have a bit more breathing room to make an offer without worrying the house will be taken by the time they’ve finished their tour. But the implications of this development extend beyond that.
“The increase in time on market is just another one of the increasingly common flags that the housing trends that prevailed over the last two years are squarely in the rearview mirror,” explains Hale.
In other words, it’s official: The raging seller’s market that descended during the COVID-19 pandemic is, at long last, cooling off. Plus, Hale adds, “more slowing could be ahead as the housing market resets.”
Home price growth is slowing
The latest June data from Realtor.com places the median home price nationwide at a record-setting $450,000. And, for the week ending July 30, the median listing price continued its 33rd straight week of double-digit growth, rising by 15.6% over last year.
These numbers might terrify cash-strapped homebuyers, but they’re actually an improvement over weeks prior. For the previous two weeks (ending July 16 and 23), median home prices rose by 16.6%.
“Even though asking prices continue to climb, this week’s data shows a deceleration, or slowing rate of price growth, compared to last week,” explains Hale.
Simply put, the home price growth spurt might be finally reaching some sort of plateau.
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Fewer homes are going up for sale
The number of new listings on the market dropped by 8% year over year for the week ending July 30—that’s the fourth straight week of decline.
“Fewer homeowners are eager to list homes for sale in this rebalancing market,” explains Hale. “This is looking more and more like sellers may be spooked that they’ve ‘missed the peak.'”
Overall housing inventory (including new and old listings still on the market) is up 30% over a year ago. This, in turn, “does give today’s shoppers an extra home to consider for every three that were on the market at this time last year,” points out Hale.
Still, as more sellers decide to sit on the sidelines, this “will cause the market to stagnate,” Hale continues, “with inventories being ‘stale’ listings.”
For homebuyers, this might mean giving properties they’ve already seen and passed over a second look. By now, many may even have price cuts.
Mortgage rates dropped below 5%
According to Freddie Mac, for the week ending Aug. 4, the average 30-year fixed mortgage rate tumbled to 4.99%, a steep decline from the previous week’s 5.3%.
This is welcome news for homebuyers, who’ve been struggling to stretch their budgets to meet today’s sky-high home prices combined with rising mortgage rates. In fact, based on interest rates as recent as late July, a household earning $75,000 per year could afford only 23% of active listings on Realtor.com.
Clearly, housing affordability is at a breaking point—but how this cookie crumbles next is anyone’s guess.
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