Nationwide home for sale inventories rose at a record pace for the third straight month in July. This is the latest sign that rising borrowing costs are starting to cool the housing market.
According to Realtor.com’s latest Monthly Housing Trends report released on Tuesday, the number of active listings in the US surged 30.7% from the previous year. Potential buyers had more home options in July, but competition was favorable for sellers, with list prices hovering near all-time highs and homes selling faster than before. COVID-19 Pandemic.
“The U.S. housing market continues to move toward a more even balance between supply and demand compared to the frenzy of 2021,” said Daniel Hale, chief economist at Realtor.com. Rising mortgage rates have forced many buyers to tighten their budgets and sellers have responded to price cuts, while homebuyers who have continued to search have found more options available, according to the report.
The interest rate-sensitive housing market has started to cool significantly in recent months. federal reserve There is a move to tighten policy at the fastest pace in 30 years to cool consumer demand and control hyperinflation. Policymakers approved his two rate hikes of 75 basis points back-to-back in June and his July, with another rate hike of that magnitude possible in September, depending on economic data ahead. showed that
After the rate hike, the average interest rate is 30 year fixed mortgage – Most popular among new homeowners, rising to nearly 6% in June, but has slowed since. Recent data from mortgage firm Freddie Mac showed that the average interest rate on a 30-year fixed mortgage hovered around 4.99% in the week ending Aug. 4.
This is significantly higher than just a year ago when interest rates were 2.77%.
Rapidly rising borrowing costs coupled with high home prices have pushed many entry-level homebuyers out of the market. A new report from Redfin last month showed that the percentage of canceled existing home sales deals in June was just under 15% of all homes under contract, at the height of the COVID-19 pandemic. was the highest since early 2020.
Sellers have responded to the slowdown in buying by lowering prices, but they remain close to all-time highs.
“Buyers will have more bargaining power as inventory increases,” Hale said. “Two years of a market that has tilted heavily in favor of sellers seems to be reflected in the rear-view mirror.”