For months, I’ve been banging on about the lack of a refinance program for private-label mortgages, those not backed by Fannie Mae and Freddie Mac.
Sure, HARP is great for underwater homeowners whose loans are owned by the pair, but what about those who aren’t so fortunate?
I’ve brought up proposals such as HARP 3 on several occasions, along with Oregon Senator Jeff Merkley’s refinance program that targets those who hold mortgages that aren’t government-backed.
The Obama administration has also been open to an expanded HARP for these types of borrowers, but without Congressional approval, any stirrings of such relief continue to fall on deaf ears.
But apparently these borrowers are actually receiving some assistance outside of HARP.
45% of Borrowers Have Received a Loan Modification
A new commentary released today by Fitch Ratings revealed that about 45% of all underwater borrowers with private-label mortgages have received a loan modification.
The company noted that loan modifications, distressed loan liquidations, and home price gains have reduced the number of underwater loans in private-label residential mortgage-backed securities (RMBS) by a sizable 25%.
There are still roughly 1.5 million underwater loans in these at-risk securities, though that number has fallen from 2.04 million.
Perhaps the biggest driver has been home price increases, with double-digit growth seen in some of the hardest-hit areas, including Arizona, California, and Nevada.
Assuming home prices continue to tick higher, which they’re expected to, the number of waterlogged loans will continue to drop at a steady clip.
While this is all good and well, the carnage is far from over. Fitch said about one-third of all outstanding borrowers in private-label RMBS pools (no pun intended) remain underwater.
It’s unclear how deeply underwater they are, but underwater nonetheless.
Additionally, the company projects some regions of the United States, notably the Northeast, to experience further home price declines before bottoming.
Why This Is Good and Bad
At first glance, it appears to be good news. Underwater borrowers with all types of loans are generally getting the help they need to continue making mortgage payments and hold on to their homes.
This benefits everyone involved because it makes for a stronger housing market. But the numbers can be deceiving.
Sure, 45% of these non-Fannie/Freddie underwater borrowers received loan mods, but what type of loan mod?
Did they get a $100 off their loan each month? Did they get a .125% interest rate reduction? Was principal forgiveness involved?
We don’t know what level of assistance they received, and if history tells us anything, a lot of these private loan mods weren’t all that attractive, at least not compared to HARP.
Through HARP, borrowers have been able to refinance their mortgages to interest rates a few percentage points lower than their previous rate.
That’s serious assistance, enough to stick around and see this crisis out. The private mods are another question.
This improvement also doesn’t bode well for an expanded HARP for non-Fannie/Freddie borrowers. The more improvement we see and hear about, the less likely Congress will be to act.
So the prospects of a new assistance program are dwindling each day.
The Multnomah Pilot Program
There is a small glimmer of hope though. Last month, the Treasury Department approved a new pilot program to assist underwater borrowers without Fannie and Freddie loans.
The so-called “Rebuilding American Homeownership Assistance” (RAHA) Pilot was launched in Multnomah County, which includes the city of Portland.
It’s limited to borrowers with “significant negative equity” who intend to stay in the prpoerty for 5+ years. They must not own any other residential property and be current on the mortgage.
According to the National Association of Realtors, the average age of first-time homebuyers is 36 years old, which means that the millennial generation—generally regarded as individuals born between 1981 and 1996—has reached the stage in their lives where buying a home is often a top priority. Yet recently, the cost of homeownership has skyrocketed in large part due to an adverse combination of high interest rates and scarce inventory, leaving millennials with a daunting homeownership outlook.
This difficult homebuying landscape has resulted in a dramatic shift in mortgage originations. Prior to the COVID-19 pandemic, U.S. mortgage originations were already on the rise—climbing from $344 billion in Q1 2019 to a 14-year high of nearly $752 billion in Q4 2019. After a brief dip due to pandemic-era stay-at-home orders and social distancing, originated mortgage volume skyrocketed to a new high of over $1.2 trillion in Q2 2021. This abrupt growth is mostly attributed to historically low interest rates, low inventory, and an increased desire for more space amid the pandemic, but these conditions were short-lived. Rapidly rising interest rates combined with other forces, such as return-to-office mandates, have brought mortgage originations down to under $324 billion in Q1 2023, the lowest it has been in nearly nine years.
In order to cope with rising prices, millennials are taking out larger home loans. In 2022, the median loan amount for mortgages taken out by applicants age 25–34 was $315,000, and $365,000 for applicants age 35–44, higher than any other age group. Similarly, the loan-to-value ratio—or the amount of the mortgage compared to the sale price of the home—was 88% for 25- to 34-year-olds and 80% for 35- to 44-year-olds. Inherently, many millennials are first-time homebuyers and typically have less existing home equity to apply to new mortgages. Additionally, millennials are at the stage of their lives where they may be supporting a growing family and require more living space compared to older generations.
Despite the overall decline in homebuying across the country, millennials still account for the majority of home purchase loans in 2022. However, millennial home purchasing varies by location. Millennials in northeastern states account for the largest share of home purchase loans, with Massachusetts (64.5%), New York (63.8%), and New Jersey (63.0%) leading the country. Midwestern states such as Minnesota (62.9%), Illinois (62.6%), and North Dakota (62.4%) also rank among the top 10 states for millennial homebuying. On the other end of the spectrum, Delaware (41.1%), Florida (45.2%), and South Carolina (46.9%) have the lowest share of home purchase loans taken out by millennials and notably have older populations.
To determine the locations where millennials are buying homes, researchers at Construction Coverage, a website that provides construction insurance guides, analyzed the latest data from the Federal Financial Institutions Examination Council. The researchers ranked states according to the millennial share of conventional home purchase loans originated in 2022. For the purpose of this analysis, millennials were considered to be those age 25–44 in the year 2022. In the event of a tie, the location with the greater total number of millennial home purchase loans was ranked higher.
The analysis found that millennials took out 57.4% of home purchase loans in South Dakota last year, with a median loan amount of $275,000. Here is a summary of the data for South Dakota:
Millennial share of home purchase loans: 57.4%
Total millennial home purchase loans: 4,193
Median loan amount: $275,000
Median loan-to-value ratio: 83.8%
Median interest rate: 5.00%
For reference, here are the statistics for the entire United States:
Millennial share of home purchase loans: 57.8%
Total millennial home purchase loans: 1,669,539
Median loan amount: $335,000
Median loan-to-value ratio: 83.1%
Median interest rate: 4.99%
For more information, a detailed methodology, and complete results, see Where Are Millennials Buying Homes in the U.S.? on Construction Coverage.
[CORRECTION: The story has been updated to reflect that the MBA projects $3.39 trillion instead of $3.9 trillion]
Mortgage applications decreased 0.3% last week, following a 0.5% drop from the beginning of November, according to a report from the Mortgage Bankers Association.
The refinance index dropped 2%, while the unadjusted purchase index fell 1% from the previous week. The seasonally adjusted purchase index climbed 3%. The refinance and purchase indexes still dwarf last year’s totals from the same week, though – 98% and 26% year-over-year, respectively.
Joel Kan, MBA’s associate vice president of economic and industry forecasting, said the refinance index decrease can be attributed to “sharp declines” in FHA and VA applications – from 10.6 to 10.5 and from 12.6 to 12.1, respectively.
“Housing demand remains supported by the ongoing recovery in the job market, and an increased appetite from households seeking more space because of the pandemic,” he said. “The average refinance loan balance of $291,000 last week was the lowest since January, and many borrowers with higher loan balances may have acted earlier on in the current refinance wave.”
Kan noted the increase in purchase activity – meaning it has climbed above year-ago levels for the 26th-straight week. Total mortgage originations are expected to be at $3.39 trillion in 2020.
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Here is a more detailed breakdown of this week’s mortgage application data:
The USDA share of total mortgage applications increased to 0.5% from 0.4%
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.99% from 2.98%
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) fell to 3.11% from 3.13%
The average contract interest rate for 30-year fixed-rate mortgages increased to 3.11% from 3.08%
The average contract interest rate for 15-year fixed-rate mortgages increased to 2.59% from 2.55%
The average contract interest rate for 5/1 ARMs increased to 53% from 2.84%
As many long anticipated, the stock market finally took a major hit after months of seemingly endless gains.
When it comes down to it, things can’t keep rising forever (remember home prices), and so we’re finally seeing some pullback, though no outright correction yet.
Thanks to the recent stock market carnage, bonds have rallied because they are where investors turn for “safety” during turbulent times on Wall Street.
The 10-Year Bond Yield Plummeted Today
When bond prices go up, yields come down and mortgage rates tend to follow the direction of the 10-year bond yield.
Early this morning the 10-year bond yield took a major dive, falling as low as 1.8680%, which is below its 52-week low of 1.87%, per Yahoo.
It has since risen to around 2.03%, which is about 8% below Tuesday’s price. During the past month the yield is down nearly 15%.
Simply put, this is great news for mortgage rates, but not so great for your stock investments!
The Dow is off more than 300 points today, or nearly 2%, and has lost nearly 6% in the past five trading days.
The 30-Year Fixed Is Back Below 4%
Okay, so your stock portfolio isn’t exactly something you want to even look at right now. But mortgage rates are lower, right?
Back in spring, the 30-year fixed was pricing closer to 4.50%. Today, you might be able to get a rate closer to 3.875%, which on a $300,000 mortgage would save you roughly $110 per month, or over $1,300 annually.
If your loan amount is closer to $200,000, the monthly savings drop to a little below $75 per month, or less than $900 annually.
At first glance, it might not even sound that great, but the savings can add up over time.
Additionally, the lower rates might actually allow more prospective homeowners to qualify for mortgages.
Lenders have become a lot more stringent when it comes to DTI ratios thanks to the QM rule limiting the back-end number to 43%.
So a rate that is a half percent lower might actually make scores of could-be homeowners eligible again, especially if home prices ease some during fall and winter.
The lower rates could also make refinancing more attractive to those who no longer saw the benefit after rates rose off record lows.
[The refinance rule of thumb.]
Be Patient with Rates
While all the headlines will tell you that rates are “plunging,” including my own because I like to mock-sensationalize, you might be disappointed when you actually run the numbers.
Aside from the savings being perhaps a bit lower than you expected, lenders also tend to take their time when lowering rates as to not get burned.
For one, they’ve got an active pipeline of loan applications with higher interest rates. They don’t want that business to jump ship.
Additionally, things can change quickly, so if they lower rates too much too fast, any positive economic news could make mortgage rates surge higher. Then they’ll get caught out.
There’s no point in lowering rates unnecessarily if this is a temporary blip, as opposed to a longer-term trend. So you should count on banks and lenders playing this one carefully.
In other words, it might take some time for rates to come down as much as they should, meaning patience could be rewarded here. Heck, even Bernanke might benefit from waiting, not that he had a choice…
Read more: Should I lock or float my mortgage rate?
Mortgage applications decreased for the fourth straight week – this time down 2.2%, according to the latest report from the Mortgage Bankers Association.
The 30-year fixed rate also dropped, reported at 3.33% after seven weeks of increases – but it’s still almost half a percentage point higher than the beginning of 2021. Purchase activity is up 6% year-over-year, with the unadjusted purchase index 39% higher than the same week one year ago.
But rising mortgage rates — and home prices that have remained high for months — are making a dent in mortgage applications, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
“Record-low inventory is pushing home-price growth at double the rate from a year ago, and even above the 10% growth rates seen in 2005,” Kan said. “The housing market is in desperate need of more inventory to cool price growth and preserve affordability. Higher mortgage rates continue to shut down refinance activity, as the pool of borrowers who can benefit from a refinance further shrinks.”
The refinance index decreased 3% from the previous week and was 32% lower than the same week one year ago.
Should lenders look to non-QM when the refi boom slows?
HousingWire recently sat down with Tom Hutchens, Angel Oak EVP of production, who shared how non-QM lending could be an effective way for lenders to replace lost business in the event of a refi boom slowdown.
Presented by: Angel Oak
Builders are waiting for lumber mills to reopen following the continued COVID-19 vaccine rollout, a move that should lower the price of building materials. Until enough mills have reopened, though, low inventory and sky-high prices are the norm, and mortgage applications for new homes could continue to suffer.
The FHA share of total mortgage applications decreased to 11.3% from 11.7% from the week prior. The VA share of total mortgage applications increased to 10.3% from 9.8% the week prior.
Here is a more detailed breakdown of this week’s mortgage application data:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.33% from 3.36%
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) decreased to 3.34% from 3.4%
The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.29% from 3.35% — the first decrease in three weeks
The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.71% from 2.72%
The average contract interest rate for 5/1 ARMs increased to 2.85% from 2.79%
Sign-up bonus: Get a $100 statement credit when you open a new Verizon Visa Card account and make a purchase on the card within the first 90 days of account opening.
4% Verizon Dollars: On grocery store and gas purchases
3% Verizon Dollars: On dining purchases, including takeout
2% Verizon Dollars: On Verizon purchases
1% Verizon Dollars: On all other eligible purchases
Additional benefits: $10 per month off each line with AutoPay
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
Verizon is not one of the cheapest cell phone plan providers on the market. But it’s reliable and reputable, which is enough for millions of customers.
If you’re one of them and you have solid credit, the Verizon Visa Card could help you reduce the cost of doing business with Verizon. And avoid the hassle of switching carriers.
The Verizon Visa Card has a lot to recommend it, including a generous cash-back program and ongoing automatic payment discounts. But it’s not for everyone, so be sure you understand its strengths and weaknesses before you apply.
What Is the Verizon Visa Card?
The Verizon Visa Card is a cash-back credit card for Verizon mobile plan subscribers. To qualify, you must be a Verizon account owner or account manager on an account with 12 or fewer lines. You can add people who aren’t Verizon account owners or managers as authorized users.
The Verizon Visa Card earns 4% back on grocery and gas purchases, 3% back on dining purchases, 2% back on Verizon purchases, and 1% back on all other purchases. Rewards accrue as Verizon Dollars, which you can redeem for purchases at Verizon’s website or physical stores. You can also use them for gift cards, statement credits against your Verizon bill, and travel bookings.
The Verizon Visa Card has no annual fee. It has some other notable benefits as well, including a $10-per-line monthly discount on your Verizon bill when you enroll in automatic payments. There’s also a sign-up bonus that requires just one purchase during the first 90 days of account opening.
What Sets the Verizon Visa Card Apart?
The Verizon Visa Card stands out from similar cash-back and retail credit cards in several ways:
Up to 4% back on eligible purchases. The Verizon Visa Card earns up to 4% back on eligible purchases. Specifically, it earns 4% back on gas and grocery purchases and 3% back on dining purchases, including takeout. That’s unusually generous for a cash-back card with no annual fee.
Broad bonus rewards categories. This card has broader bonus rewards categories than most other cash-back cards. They encompass three major spending categories in addition to Verizon purchases, likely accounting for a significant portion of cardholders’ budgets.
Easy-to-attain sign-up bonus. The Verizon Visa Card’s sign-up bonus is very easy to earn. You have to make only one purchase during the first 90 days to get it.
Ongoing automatic payment discount. If you’re a first-time enrollee in Verizon’s automatic payments plan, you can get $10 off per month, per line with this card. Verizon caps the discount at 12 lines, but that’s still up to $120 per month in potential savings.
Key Features of the Verizon Visa Card
The Verizon Visa Card has an easy-to-attain sign-up bonus, generous rewards program, and some other benefits worth noting in depth.
Sign-up Bonus
Get a $100 statement credit when you open a new Verizon Visa Card account and make a purchase on the card within the first 90 days of account opening.
Earning Rewards
The Verizon Visa Card has a four-tiered rewards program:
4% back on eligible gas and grocery purchases
3% back on eligible dining purchases, including takeout
2% back on eligible Verizon purchases
1% back on all other eligible purchases
All rewards categories are unlimited and there’s no cap on how much you can earn overall. Rewards accrue as Verizon Dollars, Verizon’s loyalty currency.
Redeeming Rewards
You can redeem Verizon Dollars for purchases on Verizon’s website and at physical Verizon stores. Alternatively, you can redeem for statement credits against your Verizon bill, gift cards from other merchants, and travel bookings.
Redemption minimums and values vary depending on what you redeem for, but points can be worth up to $0.01 apiece when redeemed for Verizon purchases and statement credits.
Monthly AutoPay Discount
When you enroll your Verizon account in automatic payments with your Verizon Visa Card, you may qualify for a $10 monthly discount on each enrolled line (up to 12 lines total). You must be a first-time automatic payment enrollee to qualify; if you’re already enrolled when you apply for the Verizon Visa Card, you don’t get the discount.
Interest-Free Financing on Eligible Accessory Purchases
This card comes with 0% APR financing for 12 months on eligible Verizon accessory purchases totaling $100 or more. You must make 12 equal monthly payments and pay off the purchase in full by the end of the period.
Important Fees
The Verizon Visa Card has no annual fee. Other fees may apply.
Credit Required
This card requires good or better credit. Verizon doesn’t reveal its exact minimum credit standards, but you may have difficulty qualifying if your FICO score is well under 700.
Pros & Cons
The Verizon Visa Card has great appeal for existing and prospective Verizon customers, but it has a few drawbacks as well.
Excellent, easy-to-attain sign-up bonus
Generous rewards program with broad categories
Potentially valuable discounts
No annual fee
For Verizon customers and account managers only
Not available with business or prepaid accounts
No 0% intro APR offer
Pros
The Verizon Visa Card is a generous rewards card that costs nothing to keep in your wallet.
Excellent sign-up bonus. The Verizon Visa Card’s sign-up bonus isn’t the most generous around, but it’s incredibly easy to earn. Just make one purchase during the first 90 days to qualify.
Unusually generous rewards program. You can earn up to 4% back on eligible Verizon Visa Card purchases with no caps or restrictions on your earning potential. That’s very generous for a no-annual-fee card.
Potentially valuable automatic payment discount. This card’s automatic payment discount benefit is worth up to $120 per month ($10 per line, per month, up to 12 lines). If you qualify, it can significant cut your cell plan costs.
Interest-free financing on eligible Verizon accessory purchases. Verizon accessory purchases of $100 or more qualify for 12-month, 0% APR financing with this card. That’s a nice perk if you like having flashy phone swag and the latest tech.
No annual fee. This card has no annual fee. It costs nothing to keep around, even if you don’t use it as your primary credit card.
Cons
The Verizon Visa Card isn’t for everyone and lacks some benefits common to other cash-back cards.
For Verizon account owners and managers only. You need to own or be responsible for a Verizon account to be eligible for this card. That’s a downside relative to retail credit cards with no real eligibility requirements. For example, anyone with decent credit can get a Target RedCard Credit Card, even if they’ve never set foot in a Target store.
Not available with Verizon business or prepaid accounts. This card is only for traditional Verizon consumer accounts. It’s not open to business or prepaid users.
No 0% intro APR offer. This card offers limited interest-free financing on eligible Verizon purchases, but it lacks a broader 0% intro APR promotion. Many cash-back credit cards do offer such promotions.
Requires good credit. You need good credit to qualify for the Verizon Visa Card. If you’re in the process of building or rebuilding your credit, wait to apply until your FICO score nears 700.
How the Verizon Visa Card Stacks Up
The Verizon Visa Card is one of the better retail credit cards on the market. To get a sense of its usefulness before you apply, see how it compares to another above-average retail card: the Target RedCard Credit Card.
Verizon Visa
Target RedCard
Cash-Back Rate
Up to 4%
5% on all eligible purchases
Bonus Categories
Gas and groceries (4%), dining (3%), Verizon (2%)
Target, dining and gas (2%)
Base Cash-Back
1% on all eligible purchases
1% on all eligible purchases
Sign-Up Bonus
Yes, more generous
Yes, less generous
Credit Required
Good or better
Good or better
The Verizon Visa Card has a slightly lower maximum cash-back rate than the Target RedCard Credit Card, but its bonus categories are broader and more generous. Its sign-up bonus is also better. It’s therefore a slightly better card overall, though the RedCard is clearly superior for shopping at Target and Target.com.
Final Word
The Verizon Visa Card is more than a retail credit card. If you’re a Verizon account owner or manager, it can easily serve as your everyday spending card thanks to a generous rewards program with three broad, common bonus categories. With no annual fee and the potential for a big monthly automatic payment discount, it could significantly reduce your monthly cell phone costs.
Unfortunately, the Verizon Visa Card isn’t for everyone. If you’re not a current Verizon customer, you need to change carriers before you can apply, which might not be worth it. Business and prepaid Verizon accounts aren’t eligible either.
The bottom line is that if you qualify for this card, it’s excellent. But qualifying might be the toughest part.
The Verdict
Our rating
Verizon Visa Card
The Verizon Visa Card is an excellent companion to your Verizon wireless phone plan. With a generous rewards program and the potential for big discounts to your monthly bill, it’s one of the best retail cards around. But it’s only available to Verizon customers and has a few other drawbacks that could impact your decision to apply.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
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Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
Average mortgage rates fell just a little last Friday. But last Thursday’s massive jump means they finished that week — and last month — higher than when they started them.
First thing, it was looking as if mortgage rates today might again barely budge. But that could change as the hours pass.
Markets will be closed tomorrow for the Independence Day holiday. And we’ll be back on Wednesday morning. Enjoy your celebrations!
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.129%
7.158%
Unchanged
Conventional 15-year fixed
6.638%
6.651%
Unchanged
Conventional 20-year fixed
7.506%
7.558%
Unchanged
Conventional 10-year fixed
6.997%
7.115%
Unchanged
30-year fixed FHA
6.672%
7.303%
Unchanged
15-year fixed FHA
6.763%
7.237%
Unchanged
30-year fixed VA
6.729%
6.937%
Unchanged
15-year fixed VA
6.625%
6.965%
Unchanged
5/1 ARM Conventional
6.75%
7.266%
Unchanged
5/1 ARM FHA
6.75%
7.532%
+0.11
5/1 ARM VA
6.75%
7.532%
+0.11
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock a mortgage rate today?
Recent reporting in the financial media makes me think mortgage rates are unlikely to see any significant and sustained falls until at least the fourth (Oct.-Dec.) quarter of 2023 and probably not until 2024.
And that’s why my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time last Friday, were:
The yield on 10-year Treasury notes edged down to 3.82% from 3.85%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were mostly lower. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices inched up to $70.61 from $70.25 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $1,930 from $1,919 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 84 from 80 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might again hold steady or close to steady. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
What’s driving mortgage rates today?
Currently
To see sustained lower mortgage rates we need to see the inflation rate halving, the economy weakening, and the Federal Reserve stopping hiking general interest rates. And none of those looks likely anytime soon.
Some progress is being made on inflation. But not enough.
And the economy is showing extraordinary resilience. Last week’s gross domestic product (GDP) headline figure was 50% higher than many expected.
Meanwhile, the Fed seems highly likely to hike general interest rates by 25 basis points (0.25%) on Jul. 26. And there may well be at least one more increase after that in 2023.
Recession
As I’ve written before, our best hope for lower mortgage rates is a recession. That should weaken the economy, reduce inflation and perhaps cause the Fed to at least hold general rates steady.
Economists have been predicting an imminent recession for ages. And, not so long ago, I bought that line and was expecting one at any moment.
But, now, many big hitters aren’t expecting a recession until 2024. Yesterday, CNN Business listed a few of those making that prediction:
Bank of America CEO Brian Moynihan
Vanguard economists
JPMorgan Chase economists
Of course, others disagree, as economists always do. Some think a recession will still land later this year. And others believe there will be no recession at all.
This week
There are a few reports this week that could send mortgage rates up or down a bit. But Friday’s jobs report is the one most likely to have a decisive impact.
The consensus among economists is that the report will show 240,000 new jobs created in June compared with 339,000 in May. Anything lower than 240,000 might see mortgage rates tumble, which would be great.
However, we’ve witnessed economists making similar predictions for employment several times over recent months. And, nearly every time, their forecasts have greatly underestimated the resilience of the American labor market and therefore the American economy.
Of course, they might be right this time. Let’s hope so. But I shouldn’t hold my breath if I were you.
Please read the weekend edition of this daily report for more background on what’s happening to mortgage rates.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Jun. 29 report put that same weekly average at 6.71%, up from the previous week’s 6.67%. But Freddie is almost always out of date by the time it announces its weekly figures.
In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. Andwe now update this section on Fridays.
Expert mortgage rate forecasts
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q2/23) and the following three quarters (Q3/23, Q4/23 and Q1/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were published on May 23 and the MBA’s on Jun. 21.
In the past, we included Freddie Mac’s forecasts. But it seems to have given up on publishing those.
Forecaster
Q2/23
Q3/23
Q4/23
Q1/24
Fannie Mae
6.4%
6.2%
6.0%
5.8%
MBA
6.5%
6.2%
5.8%
5.6%
Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Find your lowest rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change, unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Well, folks, this spring marks a major milestone in the housing market: Annual home list prices have gone negative for the first time in years. In other words, they are actually dropping nationally.
Looking at the country as a whole, sellers have priced their homes this May below where homes were priced just one year ago. That hasn’t happened in recent memory, especially after the past few years of unprecedented price hikes. But as mortgage interest rates shot up, buyers have been unable to afford the higher monthly housing payments.
Something had to give. And while today’s price dips are slight, there are no indications that overall prices will begin rising anytime soon.
So where are home prices falling the most? The data team at Realtor.com® found out. These are mostly places where prices shot up the most during the COVID-19 pandemic in the Western and Southern swaths of the country. In most of these places, there has been a lot of new construction helping to ease the housing shortage and taking the pressure off of prices to remain quite so high.
“Those markets that got the most juiced during the pandemic—where the prices really took off—are the markets where they’re now suffering the biggest declines because affordability has been the hardest there,” says Mark Zandi, Moody’s Analytics chief economist.
“The market is trying to adjust to the surge in mortgage rates and the collapse in affordability,” says Zandi. With mortgage rates hovering around 7%, he believes the price declines will continue in the near future.
“I’d be surprised if we don’t have this same conversation a year from now and prices aren’t another 3% or 4% lower than where they are today,” he adds.
For example, look at Boise, ID, No. 1 on our list, or Austin, TX, which came in at No. 2. Both were practically synonymous with the housing market’s pandemic price pump.
People who previously had to spend their nine-to-five in a big-city office building were turned into remote workers with more flexibility in where they could live. That led many people to leave more expensive cities like San Francisco and Seattle for smaller cities where they could get more space for their money.
The big caveat here is that there are still real estate markets around the country where prices are rising steadily. These are typically more affordable Midwestern markets that didn’t see the large upswings that other markets experienced during the pandemic.
To figure out where prices are falling the most, we looked at the median price per square foot in the 100 largest metropolitan areas. Then we compared median prices in May 2023 with May 2022.
We used price per square foot as the most reliable metric to track home price movement. This means in a few instances, overall home prices in a metro might be rising while the price per square foot is falling. Price per square foot is generally considered a better indicator of prices because it accounts for changes in the mix of homes for sale. For example, right now many larger, more expensive homes are sitting on the market without attracting buyers. Since those homes aren’t moving, it’s bringing up the overall price for these metros. But the price per square foot compares apples to apples and shows that in some of these markets, it’s actually cheaper to purchase a home now than a year earlier.
We looked at only one metro per state to ensure geographical diversity. Metros include the main city and surrounding towns, suburbs, and smaller urban areas.
Here’s where home prices are down the most.
Median listing price: $609,875 Median listing price per square foot: $282 Change in year-over-year price per square foot: -7.8%
Boise has been one of the poster children for the run-up in home prices during the pandemic. The area saw a massive influx of residents and soaring demand over the past few years, especially from Californians. And it’s not hard to see why.
The city checks many of the standard quality-of-life boxes that people are seeking: Homes are larger than the national average, and there’s plenty of natural beauty and outdoor recreation.
Homes in the city, surrounded by mountains, used to be a bargain. Then the pandemic hit, and from March 2020 to May 2022, prices rose 63%. Now prices are coming back down to earth.
“It’s the entry-level homes where we’re losing value,” says Boise real estate agent Rob Inman, with Boise’s Best Real Estate Keller Williams, “those homes that people got into for $400,000 to $500,000.”
That reality is rough for buyers who bought at the peak, Inman says, especially first-time buyers. The one consolation, he says, is the low interest rate they probably have on the mortgage.
But for buyers still looking for a home on the more affordable end of the spectrum in Boise, there’s a lot more to choose from now.
“Now, you can actually find stuff between $350,000 and $425,000, right in that entry-level price point,” he says. “There’s even new construction.”
Austin, TX
(Getty Images)
Median listing price: $583,751 Median listing price per square foot: $276 Change in year-over-year price per square foot: -7.7%
When it comes to pandemic hot spots, you can’t mention Boise without bringing up Austin, too. This cultural hub and capital of the Lone Star State has attracted hordes of tech companies and homebuyers leading to a surge in prices.
During the pandemic, the price per square foot for a home in the Austin metro rose around 75% from February 2020 to May 2022. The median home list price, not standardized for size, went from about $364,000 to almost $630,000. Pandemic price growth in Austin outpaced all others on the list.
Higher mortgage rates have cooled off buyers’ ability to purchase at the same price point. Right now, a relatively new, one-bedroom condo in East Austin is being listed for $420,000, with a recent $5,000 price reduction.
Median listing price: $366,075 Median listing price per square foot: $225 Change in year-over-year price per square foot: -7.3%
Myrtle Beach, nestled in the center of South Carolina’s “Grand Strand” shoreline, is a popular and affordable summer destination. The city, named after the abundant wax myrtle tree in the area, was recently named one of the nation’s most affordable golf towns by Realtor.com.
With its beaches, boardwalk and amusement parks, and plenty of golf courses, it’s another spot where prices rose over the past few years and are now coming down.
Some of that is due to the abundance of new construction in the area. With so many homes to choose from, buyers aren’t under as much pressure to bid them up.
Homes in Myrtle Beach are relatively small, so if buyers aren’t looking for a colossal home, the actual median price on homes there is 15% to 20% less than the national median. This remodeled three-bedroom, two-bathroom house is on the market for $284,900 after a $15,000 price cut.
Phoenix, AZ
(Getty Images)
Median listing price: $529,450 Median listing price per square foot: $274 Change in year-over-year price per square foot: -5.6%
During the COVID-19 pandemic, home prices in Phoenix got as hot as a sweltering Sonoran summer, and just as the monsoons mark the end of the season, raised interest rates have come like a cold downpour on the market. After more than 50% pandemic-era appreciation here, the median price per square foot is down more than 5%.
But the housing boom in Phoenix—as well as the subsequent correction—is nothing new for the Valley of the Sun. Phoenix was one of the markets with the biggest swing up and down during the late 2000s housing bubble and crash.
Part of the reason why is that Phoenix has the capacity for so much growth. Without a real winter to speak of, home construction can go on year-round. And the only thing surrounding Phoenix is more land, so developers can continue to build outward.
“Developers can keep sprawling,” says local real estate agent Angela MacDonald. “Without the new homes, we wouldn’t be able to keep up with the demand for people moving here.”
Even with the price decline, sellers still have a bit of an edge in the market. There are still many buyers and not as many homes to go around.
Median listing price: $549,900 Median listing price per square foot: $305 Change in year-over-year price per square foot: -4.7%
Florida was another red-hot real estate market during the pandemic. As more folks could work remotely, many migrated to the Sunshine State with its low taxes, reasonable cost of living, and year-round warm temperatures.
Part of the reason Sarasota, about an hour south of Tampa on the southwestern coast of Florida, made our list is because it’s also one of the places in the U.S. where the number of homes for sale has risen the most.
Sarasota homes are also spending longer on the market, with the median listing on the market for nearly eight weeks. Homes were selling in about half of that time a year ago.
This midcentury three-bedroom home near downtown Sarasota has undergone a price reduction bringing it down to $499,000.
Salt Lake City, UT
(Getty Images)
Median listing price: $635,000 Median listing price per square foot: $247 Change in year-over-year price per square foot: -4.0%
Salt Lake City is another area that’s grown in popularity over the past few years and attracted more tech companies and workers. That led prices to rise—until recently.
“Buyers are holding back a little when it comes to waiving contingencies or inspections,” says Lory Hendry, a real estate agent at Windermere Real Estate in Salt Lake City, ”
That’s in contrast to the frenzy of the pandemic, when fast sales were often sealed without those protections.
Salt Lake City has the biggest homes of any metro on our list. So buyers looking for more home for their money might want to give the city a hard look. Surprisingly, it’s the higher end of the market, the larger, more luxurious homes, where high demand is still leading to quick sales and competition among buyers.
“Anything in that $1 million to $2 million price point is going pretty quickly,” says Hendry.
For people looking for a bit more of a bargain, the Ogden metro, just north of Salt Lake City, is a little less expensive and was recently featured on our list of places where the number of homes for sale is growing the most right now. The number of listings in the Ogden area has roughly tripled over the past year.
Median listing price: $238,250 Median listing price per square foot: $152 Change in year-over-year price per square foot: -3.9%
Venturing outside of the West and South, the “Steel City” is the only Northeastern spot on our list.
Pittsburgh stands out on our list as a place with some of the smaller homes, with a median home size around 1,600 square feet. Combined with a price per square foot that’s about one-third less expensive than the national median, this means the price of a Pittsburgh home is quite a bit lower than in most other places.
This anchor of the Steel Belt didn’t see the same kind of pandemic-era price appreciation as others on the list. However, the overall housing slowdown seems to have pulled down prices anyway.
Buyers looking in the area can find a three-bedroom home in the South Side Flats neighborhood for $285,000. It recently underwent a $10,000 price reduction.
Winstone-Salem, NC
(Kruck20/iStock)
Median listing price: $345,899 Median listing price per square foot: $148 Change in year-over-year price per square foot: -3.6%
For the previous few metros on our list, there’s a quirk to how home price data is affected by the mix of homes for sale. The anomaly is the most pronounced in the Winston-Salem metro. While the median list price per square foot has dropped, overall prices in the metro are rising.
This is due to shifting buyer preference. As mortgage rates rose and buyer budgets shrunk, many buyers shied away from larger, more expensive homes. That left these properties on the market as the cheaper, smaller homes were more quickly scooped up. The bigger homes have been pulling up overall prices for the metro even though local real estate costs less than it did a year ago.
If you were to compare the median home list price in Winston-Salem with Pittsburgh, you’d see that the Winston-Salem price is about $100,000 more. But the median home listing in Winston-Salem is more than 500 square feet larger. So buyers get more space for their money.
A nearly 100-year-old, three-bedroom home about 10 minutes south of downtown Winston-Salem is listed now for $220,000, after a $9,000 price reduction.
Median listing price: $662,875 Median listing price per square foot: $340 Change in year-over-year price per square foot: -3.4%
Sacramento, California’s capital city, may be the most expensive of any on our list, with homes priced around 50% higher than the national average. But for California, Sacramento is cheap! The state’s median list price per square foot is more than 30% higher.
The city became a popular alternative to the pricier San Francisco Bay Area during the pandemic as buyers sought out more space for less money. But as companies have been calling workers back to their offices, the area isn’t as hot as it was during the pandemic. There has also been plenty of new construction in the area.
A two-bedroom townhome near downtown Sacramento can be picked up for a little under $500,000 right now.
Chicago, IL
(Getty Images)
Median listing price: $376,000 Median listing price per square foot: $205 Change in year-over-year price per square foot: -1.1%
The real estate market in the “Windy City” is really a tale of two cities, says Compass real estate agent Amy Duong Kim.
Chicago’s dense downtown should be thought of as one market, she says. The suburbs on the periphery, where about two-thirds of the metro residents live, should be thought of as another.
“In River North and Gold Coast and the other downtown neighborhoods, they were hit the hardest during COVID,” Duong Kim says. “Unfortunately, they haven’t bounced back yet.”
The listing data backs up her point about the two different markets of Chicago. Where the larger metro area is showing a 1.1% decline in price per square foot, the city of Chicago at the center of the metro is showing the list price per square foot is down just a little more than 4%.
This two-bedroom, one-bathroom condo in downtown Chicago is on the market for $299,000.
Of all the housing market bugaboos that haunt and frustrate wannabe buyers in this stressed, prime-time selling season of 2023 (Sky-high prices! Rising mortgage rates! Inflation and economic uncertainty!), one challenge still sits at the center of everything: finding a good home to purchase.
America’s been in a severe housing shortage since at least the earliest days of the COVID-19 pandemic, and it affects just about all else. A shortage of inventory leads to frenzied bidding wars, out-of-reach price tags, and market paralysis.
But the situation is changing, at least in some markets. And Realtor.com® decided to find out where. When it comes to home inventory levels in America, it’s both the best of times and the worst of times—it all depends on where you live.
To gain some insight into where things stand going into the crucial summer season, the data team at Realtor.com crunched the numbers to determine the metropolitan areas with the largest increases—and most substantial decreases—in available home inventory.
You can see for yourself in the table below the change in housing inventory in the 100 largest metros.
So what did we find? Well, across the country, inventory is up year over year, by a little more than 20%. But this is largely a function of the incredibly low inventory levels of the past couple of years. There aren’t more sellers coming onto the market. Instead, homes are sitting longer. And even the current bump in year-over-year inventory still puts this year below pre-pandemic levels. Nationally, the number of new listings was down 22.7% in May compared with the previous year
And the data underscores a truth that has become increasingly evident: There’s no single, monolithic housing market. Instead, real estate has become a tapestry of regional markets, each with unique patterns.
In certain regions, particularly in the more affordable pockets of the Midwest and Northeast, inventory remains tight. Despite higher mortgage rates casting a shadow over buyers and sellers alike, homes are selling at a brisk pace, prices continue to rise, and inventory remains relatively low compared with previous years.
Compare that to the West and South, where hot markets like Austin, TX, Nashville, TN, and Sarasota, FL, have seen inventory more than double compared with this time last year. These pandemic-era boomtowns have been on a roller coaster when it comes to pricing, inventory, and demand.
Nick Libert, a real estate agent with EXIT Strategy Realty in Chicago, calls this a “balanced-stagnant market.”
Elevated rates have put the brakes on the overall housing market activity, from the perspective of buyers and sellers, but a bridled demand is still very much present.
“Not a lot of people are moving,” Libert says. “Part of the reason is there’s very little to look at.”
So let’s take a look at the biggest markets to see what’s what in different parts of the country.
We found where inventory is up and down the most in the 100 largest U.S. metros by going through the Realtor.com monthly housing market data to compare inventory in May 2023 with May 2022. We selected just one per state to ensure geographic diversity. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Where inventory has risen the most
1. Sarasota, FL
May 2023 year-over-year active listings change: +128.1% May 2023 median list price: $549,900
What a difference a year makes.
Located on the southwestern coast of Florida, known for picturesque white-sand beaches and barrier islands along its Gulf of Mexico shoreline, the Sarasota metro experienced the biggest year-over-year jump in inventory. There were nearly 2.3 times the number of active listings, at just shy of 4,600, this May compared with last.
Unsurprisingly, homes are sitting on the market almost twice as long, now taking about 7.5 weeks to sell.
This midsized metro, which serves as the spring training destination for the Baltimore Orioles, is relatively expensive compared with much of Florida. Median list prices are about 9% above the median state price—only Miami is priced higher.
Carissa Pelczynski, a real estate agent at Preferred Shore in Sarasota, says the attitude of many of the out-of-town buyers who were driving prices up during the pandemic has shifted in the past several months.
“People are just more hesitant now,” Pelczynski says.
Also adding to the inventory glut, according to Pelcynski: Too many sellers are pricing their homes as if the market were still as hot as it was a year or two ago. (It’s not.)
2. Nashville, TN
Nashville, TN
(Getty Images)
May 2023 year-over-year active listings change: +124.7% May 2023 median list price: $580,000
Music City is the next stop on our list, with a jump in inventory almost as large as Sarasota’s. This icon of the South is home to the Grand Ole Opry and the Country Music Hall of Fame, and it’s an increasingly popular destination for buyers.
What’s especially notable about Nashville right now is that even as inventory is more than double what it was this time last year, in May the price per square foot hit an all-time high. It surpassed the previous high mark in June 2022.
Homes in Nashville are generally larger than average, with a median size of almost 2,200 square feet. It’s also about 15% more expensive than the national median price per square foot.
A recently listed, 500-square-foot condo just southeast of downtown Nashville and within walking distance of the Cumberland River is around $515,000.This newly constructed, four-bedroom townhome is on the market for about $600,000.
Watch: The Best Cities in the U.S. for Home Sellers Right Now
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3. Austin, TX
May 2023 year-over-year active listings change: +112.5% May 2023 median list price: $583,751
It seems no list of real estate superlatives is complete without Austin. The Lone Star State’s capital city had become one of the hottest markets in the country during the pandemic, with demand—and as a result, prices—exploding. Builders raced to put up homes in the area.
But when mortgage rates rose in 2022, the Austin market was one that cooled the most, with list prices falling 15% from May 2022 to January of this year. Since then, prices have been creeping back up, now at 9% below last year’s peak.
Even as prices are back on the rise, the typical Austin home is on the market for eight long weeks before selling, compared with just two weeks during the spring 2022 pandemic pump peak.
No place on our list has a larger portion of listings that have had a price reduction, with more than 1 in 3 listings having been discounted by the seller.
The number of homes available in the Austin metro is back to pre-pandemic levels, thanks in part to the boom in new construction.
4. New Orleans, LA
New Orleans, LA
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May 2023 year-over-year active listings change: +81.0% May 2023 median list price: $345,000
The number of homes available in the Big Easy has earned it a place on our list, with an 81% increase.
Worth noting: By this same time last year, New Orleans inventory was already back on the rise. Measuring from the inventory low point, New Orleans has also seen the number of available homes more than double.
The inventory increase hasn’t quite put it back to pre-pandemic levels, but if the upward trajectory continues, New Orleans should reach that milestone in the coming months.
And although list prices in New Orleans haven’t been as swingy as they’ve been in a place like Austin, they have crept back up—and are now less than 1 percentage point shy of the all-time high set in March 2022.
A newly listed, midcentury boathouse on New Orlean’s iconic Lake Pontchartrain can be found for about $375,000.
5. Tulsa, OK
May 2023 year-over-year active listings change: +74.1% May 2023 median list price: $369,450
There are plenty of homes for sale in Tulsa—they just aren’t the more affordably priced properties that buyers are seeking.
“We have so much more inventory right now, and we just have less buyers,” says local real estate agent Tiffany Johnson, of Tiffany Johnson Homes.
It’s a price point game, she says. “You can’t find anything under $150,000, and anything under $300,000 is selling quickly.”
The market has shifted a lot since last year, especially for sellers who now face more competition.
“The buyers who are in the market are very serious. They will make a move quick, but they have so many houses to choose from, so [sellers and agents ] have to be almost perfect,” Johnson says. “They have to find ways to actually market these homes now.”
Rounding out the top 10 metros where the number of homes for sale has increased the most is Raleigh, NC, at 72.7%; Wichita, KS, at 59.8%; Las Vegas, at 57.5%; Greenville, SC, at 57.1%; and Omaha, NE, at 54.4%.
Where inventory is down the most
1. San Jose, CA
May 2023 year-over-year active listings change: -35.3% May 2023 median list price: $1,530,000
Topping the list of places where inventory is tightest is Silicon Valley’s San Jose. The tech hub is one of the most expensive metros in the nation, with a median price tag of $1.5 million.
Posing another hurdle for buyers: The number of homes for sale is still near record lows. The metro area, with more than 2 million people, had fewer than 1,000 homes for sale in May.
Tuan Tran, a Realtor® at Home Page Real Estate in San Jose, sees changes in this unique and wealthy home market amid turbulence in the tech business.
“Now I see a lot of investors holding back,” Tran says, adding that they are waiting to see whether a tech recession runs deeper. “Inflation is still high. Paychecks haven’t gotten much bigger.”
2. Hartford, CT
Hartford, CT
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May 2023 year-over-year active listings change: -26.0% May 2023 median list price: $424,925
Hartford topped our list of markets that will dominate in 2023, and the low home inventory seems to be proving us right.
Buyers from around the Northeast have poured into the “Insurance Capital of the World,” about 90 minutes southwest of Boston and 2.5 hours northeast of New York City, due to the reasonably priced homes for sale and good jobs available.
The city has the fewest price reductions of any city, with only 1 in 14 listings with a markdown.
In another sign of the market’s strength, Hartford boasts the fastest-selling homes of any place on our list, with the typical home spending just 19 days on the market. That’s less than half the national median time of 43 days in May.
3. Milwaukee, WI
May 2023 year-over-year active listings change: -23.4% May 2023 median list price: $374,950
The housing markets in many traditionally affordable, Midwestern cities, like Milwaukee, have continued to chug along, while other pricier markets have sputtered or stalled.
In May, there were 23% fewer homes for sale than the year before. And the median home in Milwaukee is selling in 29 days, just four days more than the all-time low of 25 days in May 2022.
Another indicator of the overall strength of the Milwaukee market: The relatively small portion of homes that have had a price reduction. Only 1 in 10 is marked down.
For those considering selling in Milwaukee, the metrics suggest a quick sale, likely without a price drop, is still the norm right now. Buyers might want to consider this updated, three-bedroom, two-bathroom Cape Cod for about $225,000.
4. Dayton, OH
Dayton, OH
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May 2023 year-over-year active listings change: -20.3% May 2023 median list price: $234,950
Dayton, a Rust Belt city bout an hour northeast of Cincinnati, is the most affordable of all the cities on our list, with prices 45% below the national median. The “Gem City” is home to the National Museum of the U.S. Air Force.
In contrast to what we’ve seen in the markets that got hot during the pandemic pump, prices in Dayton have been steady: no big swings up or down, but a rather steady and slight incline.
Dayton’s median listing price per square foot in May was up 6.7% year over year.
Buyers can find big deals in Dayton. This four-bedroom, 2.5-bathroom house on a third of an acre is for sale for $219,000.
5. Chicago, IL
May 2023 year-over-year active listings change: -18.5% May 2023 median list price: $376,000
The Windy City features near-record low inventory right now.
The number of available homes crept up by about 2% from April to May. But aside from the February 2022 nadir in inventory, there haven’t been this few homes on the market in Chicago in recent history. (Realtor.com listing data goes back to mid-2016.)
“Currently, what my buyers are seeing—and my sellers are experiencing—is that the north side of Chicago, along the lakefront, has, by far, the most pronounced drop,” says Libert of EXIT Strategy Realty in Chicago.
The rest of the top 10 metros with the largest decrease in inventory were Washington, DC, at -15.6%; Bakersfield, CA, at -13.2%; Albany, NY, at -13.1%; Allentown, PA, at -12.5%; and Seattle, at -10.8%.
There are all sorts of gimmicks, tips, and tricks out there to pay down the mortgage a little (or a lot) quicker.
And one that sounds relatively painless is the simple rounding up of one’s mortgage payment.
So if you owe $1,550 each month, paying $1,600 instead could make a sizable dent in your mortgage over the years, thereby reducing the loan term and saving you lots of money in interest.
But just how effective is rounding up your mortgage payment? Well, it depends. Let’s take a look at a couple of potential scenarios to find out.
It Depends How Much You’re Actually Rounding Up
The biggest factor is your actual monthly mortgage payment
Which will determine how much extra you pay each month
Assuming you round up your payments to the nearest whole number
It can be quite different depending on that original payment amount
First off, you need to take a look at your actual monthly mortgage payment. If it’s $1,599 a month, rounding it up to $1,600 will do virtually nothing to save you money on your mortgage.
If anything, you might just confuse your loan servicer when sending in what appears to be the wrong payment amount.
Conversely, if your monthly home loan payment is $1,501, bumping it up to $1,600 will lead to considerable savings.
Of course, if you have to increase your payment by nearly $100 a month, it’s no easy task, especially if you have other expenses to worry about, or high-interest debt that needs to be paid down/off as well.
Always keep that in mind when deciding whether it makes sense to pay even more money toward your mortgage.
With interest rates so cheap, a mortgage is probably the least expensive debt you’ve got, which begs the question, why rush it?
Let’s suppose your mortgage payment lands somewhere right in the middle:
So let’s say you’ve got a $200,000 mortgage, and your required monthly mortgage payment is $954.83.
Instead of making the standard payment, you could round it up to an even $1,000, paying an extra $45.17 a month toward principal (make sure the rounded-up amount does indeed go toward principal!)
For many people, $45 bucks could be negligible, small enough to go unnoticed each month.
Yet by making that $1,000 payment as opposed to $954.83, you’d save a whopping $13,606.49 in interest over the life of the loan and shave nearly 2.5 years off the term.
Not bad for paying a little bit extra each month, right? It’s a simple form of forced savings that you might not even miss in your bank account.
Let’s look at another example, this time a larger loan amount with a slightly higher interest rate:
In this scenario, you’d pay off the 30-year loan only 1.5 years earlier, but you’d save nearly $25,000 in interest over the loan term.
The interest savings are larger because more interest is due on a larger home loan, but the term isn’t reduced as much because the rounded-up payment is smaller relative to the larger payment due at that loan amount.
Still, $25,000 in savings for paying an extra $67 bucks a month ain’t too shabby.
Remember, these scenarios assume you’ll hold the loan to term, which many homeowners do not.
[More ways to pay off your mortgage early.]
Savings From Rounded-Up Mortgage Payments Are Highly Variable
It isn’t a very scientific approach to paying down your home loan
Since the savings are completely random based on the rounded-up amount
You might be better served with an actual plan/goal
Such as trying to pay off your mortgage in X amount of time
Or attempting to save X dollars in interest over the loan term
All said, the savings will vary based on a number of factors, such as how large the loan is, what the interest rate is, and how much larger the rounded-up payment is.
It also depends on when you start rounding up, and how often you do it. If you only round up your payment every other month, or if you start several years after your loan term began, the savings will be reduced.
Another potential flaw to the round-up method is that it takes discipline, unlike say a 15-year fixed or shorter-term loan where the higher payments must be made each month.
In other words, if you don’t stick to the plan and round up your payments each month, the savings won’t be realized.
Of course, this can be a godsend too if money gets tight and you no longer have the extra cash to make slightly larger payments.
It’s also not the best method for those with a very specific goal, such as paying the mortgage off before retirement.
But if you want something simple and easy, you can certainly give it a try.
In summary, there are some obvious pros and cons, but rounding up mortgage payments does work, and it can save you thousands in interest, while allowing you to own your home free and clear a bit earlier.
Be sure to do the math for your particular loan to see if it makes sense. You might find that your extra cash is better off somewhere else.
Pros of Rounded-Up Mortgage Payments
Very easy to implement, can stop at any time
Shouldn’t cost much more money each month
Can save you a ton of money in interest over the years if you stick with it
Will shorten your loan term by years in some cases
Cons of Rounded-Up Mortgage Payments
May not save you much money if rounded up payment is negligible
A random way of paying the mortgage off early (no clear goal)
Loan servicer may get confused if you send in the “wrong payment amount”
Can stop at any time so it requires discipline in order to be effective
Read more: Should you invest your money or use it to pay off the mortgage?
