Mortgage rates fell below 7% this week, with the average rate for a 30-year fixed home loan decreasing from 7.02% last week to 6.94% for the week ending May 23, according to Freddie Mac. “Spring homebuyers received an unexpected windfall this week, as mortgage rates dipped below the seven percent threshold for the first time in over a month,” said Sam Khater, Freddie Mac’s chief economist, in a statement. Mortgage rates had been above 7% for five weeks, so this decline could provide a boost to the waning spring housing market. Along with lower rates, buyers can take advantage of 28 consecutive weeks of increasing housing inventory as of the week ending May 18. “The inventory of homes for sale increased by 35.5% compared to last year, this is the highest level since July 2020, in the early days of the COVID-19 pandemic.” says Sabrina Speianu, a data scientist at Realtor.com®, in her latest analysis. Here’s a detailed look at the latest housing market data and its implications for homebuyers and sellers in our newest installment of “How’s the Housing Market This Week?” |
The Mortgage Rate Outlook“Rates dropped after April’s consumer price index data showed a slowdown in inflation following an acceleration since January 2024, recent labor market and inflation data suggest conditions are improving, although the path to lower interest rates may still encounter some unexpected bumps.” says Sabrina Speianu Overall, rates seem to be trending downward. “The progress in inflation and the labor market seen in April’s data will likely stabilize mortgage rates and might even lead to further declines,” said Jiayi Xu, an economist at Realtor.com, in a statement. “With mortgage rates no longer climbing, buyers and sellers are eagerly anticipating lower rates to revive the housing market.” |
More Homes Are Coming to MarketIn addition to the total number of homes for sale reaching four-year highs, new listings also surged by 8.1% compared to the previous year. “Seller activity continued to climb annually last week and accelerated relative to the previous week’s growth,” says Sabrina Speianu. Last week, new listings increased by 6.6% year over year. This recent growth suggests that sellers might finally be more willing to put their properties on the market. “Earlier in May, many sellers—who are also buyers—cautiously held back from listing their homes as mortgage rates increased and new listings slowed,” says Speianu. “However, mortgage rates have softened again this past week after several weeks of growth. In response, more home sellers have chosen to list their homes, with new listings picking up pace again.” The Pace of Home Sales SlowsHomes spent an extra day on the market for the week ending May 18 compared to the same week last year, with the typical home spending 47 days on the market in April. “Recent increases in mortgage rates have led to both buyers and sellers acting more cautiously, resulting in home sales at rates similar to last year for the past three months,” says Speianu. However, it’s worth noting that, although home sales are slowing, the pace is still quicker than pre-pandemic times since inventory has yet to return to “normal levels,” as Speianu points out. “Home inventory, despite gains compared to last year, still remains below pre-pandemic levels and continues to provide a floor to listing prices,” she adds. |
