Hey there, folks! Let’s dive into the latest updates in the housing market.
First up, the Fed raised its policy rate a quarter point in March but didn’t further increase its year-end 2023 rate projections due to concerns over bank failures. While this could mean a shallower path for interest rates, stronger economic and inflation data could easily dash those hopes. The most recent jobs report showed that while job growth cooled, unemployment remained at a long-term low. Job openings have dropped, but there’s still a fair amount of labor market strength.
As for inflation, it continues to cool gradually, roughly in line with expectations. Prices for key necessities like shelter and food continue to climb, but recent housing and rent data show slowing growth that the government’s measures will eventually pick up.
Now let’s talk about mortgage rates. In the second half of March and early April, they eased as bank failures raised concern for the broader financial sector. So far, we’ve not seen an impact on economic readings, and in the last week, mortgage rates inched back toward 6.5%. Mortgage rates are a pretty big wildcard for both home shoppers and sellers. Interestingly, a survey of recent potential sellers who would also need to buy a home showed that 82% felt “locked in” by their existing low mortgage rate. As mortgage rates settle, we’re likely to see inventory begin to improve more meaningfully alongside housing demand.
According to Realtor.com’s “Housing Trends” report, inventory continues to climb relative to one year ago as homes sit longer on the market. Unfortunately, new listings continued to decline, reflecting slower market conditions. Price growth eased further to 6.3%, but the median home listing price is still climbing for the season, reaching nearly $424,500. Regionally, the South has seen the biggest surge in inventory and the smallest decline in new listings. The West saw the lowest pace of home price growth, with a handful of markets in the South and West seeing median price declines.
Existing Home Sales and New Home Sales both bounced notably higher in February, but momentum slipped somewhat in March for existing home sales. Both home shoppers and sellers remain very interest rate sensitive. One other key stat: while listing prices continue to climb, the median home sales price is declining, registering year-over-year drops in both February and March. Price declines in the West drove this trend. All other regions saw home prices go up.
Looking ahead, home purchase sentiment improved in March, but it remains quite low. Expect to see a very gradual and uneven climb for home sales in the year ahead, with more regional variation than we’ve seen over the past few years.
One bright spot for the housing market and sellers, in particular, is that mid-April is the “Best Time to Sell.” Homeowners listing homes now can expect relatively faster sales and higher prices because we’re at the seasonal point when demand typically far outstrips supply, creating a clear plus for sellers. For buyers, the upside is that we typically see the number of homes for sale climbing sharply ahead and staying elevated through fall, so seasonal competitiveness is likely to start to wane in most markets in the months ahead.
Finally, if you’re thinking of renting instead of buying, note that households in the rental market continue to feel the pinch of rising rents. While the pace of increase has slowed, rents continue to eat up a larger portion of household paychecks. The median asking rent in the least affordable Miami market was more than double the rent in the most affordable market–Oklahoma City.
For more details on these updates and to download our housing data, head to realtor.com/research.