Housing stock rises as interest rates scare off buyers
After a two-year dip in housing inventory, the housing market is showing signs of recovery, according to data released by real estate agent.com.
The week ending July 2 saw the rate of new listings increase by 8% year over year. The active inventory rate increased by 29% compared to last year’s rate.
An increase in real estate listings is partly due to higher interest rates, which discourage potential buyers, Danielle Hale, chief economist at Realtor.com, said in a statement.
“More homeowners are taking advantage of the still strong housing market conditions, just as rising mortgage rates and home prices are forcing many buyers to reconsider their moving plans,” Hale said. “As a result, the number of homes for sale is increasing rapidly.”
Mortgage interest rates to purchase this week were 5.30%. A year ago at the same date, the 30-year fixed rate purchase rates were 2.90%, compared to Freddie Mac PMMS Index.
Currently, there are about four homes on the market for every buyer, up from three homes for every buyer in early July 2021, according to the report.
Still, the market needs even more supply before the selection is on par with the pre-pandemic housing market or even early in the pandemic, according to the Realtor.com report.
The time homes spend on the market is also starting to normalize.
“This is the first time in three months that we haven’t seen a new time-to-market record,” Hale said. “More homes for sale will eventually bring a better balance to the housing market, slowing the lightning-fast pace of home sales that we have seen in recent years. We already have a clue.
Median listing prices, however, continued to grow, rising 18.3% year over year. The report called it a potential “data quirk” and said it could be attributed to the Independence Day holiday, which is the busiest week for home sales.
“Independence Day plays a role [in rising prices,”] Hale said. “We expect to see house price growth slow in the coming weeks and continue to slow.”
The median listing price for homes hit a new high of $450,000 in June, but expect no further growth in the median listing price this year.
The report generally states that the median home listing price trend “peaks” at this time of year and begins to subside in the second half of the year.
Hale said that means buyers still in the market will likely see more affordable options in the future.