There’s no relief in sight for high borrowing costs as interest rate cuts are pushed further into the distance. Still, a surge in housing inventory could give buyers more options, Fannie Mae said in a report.

Mortgage rates have ticked above 7% in recent weeks and that, combined with high home prices, has rendered housing unaffordable for many. Fannie Mae is still forecasting for mortgage rates to decrease later this year to 6.6%, but borrowing costs will only drop meaningfully once the Fed dials back interest rates. That won’t come until the central bank is confident that inflation will reach a 2% target rate. 

The inflation data registered this year has been higher than the Fed expected. The latest reading of the personal consumption expenditures (PCE) price index, excluding food and energy prices—a key metric the Federal Reserve tracks to measure inflation—increased by 3.7% after rising to 2% in the fourth quarter, raising concerns that inflation may be headed in the wrong direction. Fannie Mae has readjusted its expectations on inflation and now expects the Consumer Price Index to end 2024 at a 3.1% annual rate, compared to the previously projected 2.5%.   

“While we still expect economic growth and inflation to moderate going forward – and, thus, for mortgage rates to drift downward – interest rates existing in a ‘higher for longer’ state seems to be an increasingly real possibility in the eyes of market participants, as well as some homebuyers and sellers,” Fannie Mae Vice President, Economic and Strategic Research Hamilton Fout said. “While we’ve recently seen evidence that some potential home sellers are becoming more acclimated to the higher mortgage rate environment and putting their homes on the market, the recent move upward in rates is yet another headwind to the recovery of home sales, and it intensifies long-standing affordability challenges for consumers.”

The silver lining for the housing market is that supply is expected to build as home sales lag, which “should help gradually thaw housing inventory and contribute to decelerating home price growth,” Fannie Mae said. 

Homebuyers can find the best mortgage rate by shopping around and comparing your options. You can visit an online marketplace like Credible to compare rates, choose your loan term and get preapproved with multiple lenders at once.

SOCIAL SECURITY: COLA INCREASING BUT MEDICARE COSTS RISING TOO IN 2024

Home prices forecasted to keep rising

Fannie Mae has readjusted its home price projection and forecasts upwards, but there are signs that gains are slowing. Home prices are forecasted to increase 4.8% annually in 2024 and 1.5% in 2025.

Home prices are now 6.4% above their level this time last year, up from the 6% increase registered in January, according to the latest S&P CoreLogic Case-Shiller national home price index report.  Across the nation, home prices increased 0.6% month-over-month after dipping the previous month. This annual and monthly growth in home prices comes as homebuyers struggle with affordability issues caused by high mortgage rates and a lack of housing supply.  

“Home price growth pivoted in February, as the impact of the January 2023 Home Price Index bottom finally faded,” CoreLogic Chief Economist Selma Hepp said in a statement. “As a result, the U.S. should begin to see slowing annual home price gains moving forward.”  

If you’re looking to become a homeowner, you could still find the best mortgage rates by shopping around. Visit Credible to compare your options without affecting your credit score.

MILLENNIALS ARE DESPERATE TO BUY A HOME, MOST WILLING TO PAY A MORTGAGE RATE ABOVE 7%: SURVEY

Here’s how much homebuyers need to earn 

Homebuyers need to earn more today to afford a home. Based on the current interest rate of 7.22% over a 30-year mortgage, buyers today would need to earn an annual income of roughly $120,000, plus a 10% down payment, to afford a home, according to the Clever Real Estate report. However, the average American household earns about $45,000 less than that, and most first-time buyers can’t afford a 10% down payment.

Based on the median annual salary and a 10% down payment, most first-time buyers can afford a home priced at about $207,529 — 38% less than the current median-priced home. Increasing the down payment to 20% lowers the salary threshold to $98,202, but saving that amount could take years, the Clever report said. 

Moreover, higher mortgage rates and home prices mean that 20% of Americans spend roughly 30% of their paychecks on monthly home loan payments, and 10% spend more than half of their pay, according to a recent NewHomesMates.com survey. Homeownership is considered affordable if households spend at most 28% of their monthly income on housing costs. The survey said those ready to take the plunge have had to sink a larger portion of their paychecks into mortgage payments and make significant cuts to everyday spending.  

If you’re considering becoming a homeowner, it could help to shop around to find the best mortgage rate. Visit Credible to compare options from different lenders and choose the one with the best rate for you.

THIS IS THE #1 CITY FOR FIRST-TIME HOMEBUYERS, AND OTHER HOT US HOUSING MARKETS

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Source: foxbusiness.com

Apache is functioning normally

Traditionally speaking, the spreads between the 10-year and mortgage rates is 1.60%-1.80%. Right now, the difference between them is 2.60%. However, compare that to the worst levels last year, when the spread got as high as 3.10%. That’s a 0.50% difference in rates.

For the rest of the year, it’s all about the labor market. The bond market has tried three times to front-run a recession or weaker economic data by pushing long-term yields lower, only to be rebuffed by labor data not breaking. So, keep an eye on weekly jobless claims data, and all the jobs report reports that come out at the end of the month. You can find the latest update on that data line here.

Purchase application data

Purchase application data was positive week to week but still down year over year. We are seeing better positive sales growth on our weekly pending sales data. This can be partly due to a higher percentage of cash buyers in the sales mix that purchase applicatoins won’t account for. Also, purchase application data can be a funky data line to sometimes track the percentage. I will talk about this on the HousingWire Daily podcast on Monday. 

Since November 2023, when mortgage rates started to fall, we have had 12 positive prints versus nine negative prints and two flat prints week-to-week. Year to date, we have had six positive prints, nine negative prints and two flat prints.

Weekly housing inventory data

Last week was another week that missed my inventory growth model with higher rates. I am always looking for weekly inventory growth between 11,000 and 17,000 when rates are over 7.25%. Rates have fallen recently and inventory growth was higher last week than the previous week. However, I anticipated a bit more kick than the increased inventory of 8,727 that we got. So, we shall see how next week looks. Let’s remember, it’s Mother’s Day weekend this weekend. Next week, inventory should surpass the highest levels we saw last year. 

  • Weekly inventory change (May 3-May 10): Inventory rose fro  559,744 to 568,471
  • The same week last year (May 5-May 12): Inventory rose from 420,489 to 421,101
  • The all-time inventory bottom was in 2022 at 240,194
  • The inventory peak for 2023 was 569,898
  • For some context, active listings for this week in 2015 were 1,109,727

New listings data

One of the most encouraging housing developments for 2024 — in stark contrast to 2023 — is the year-over-year growth in new listings. This is a significant shift, considering 2023 marked the lowest level ever recorded. The fact that this data line is now positive is a very promising sign for the housing market. While the growth rate is slightly lower than anticipated for this year, it’s still a step in the right direction. Despite a decline in the past week, we are maintaining positive year-over-year growth.

Here’s the new listings data for last week over the last several years:

  • 2024: 68,843
  • 2023: 61,911
  • 2022: 73,107

Price-cut percentage

In an average year, one-third of all homes take a price cut — this is standard housing activity. When mortgage rates increase, demand falls, and the price-cut percentage grows. When rates drop and demand improves, the percentage falls.

The percentage of price cuts is growing year over year as inventory is growing. The slope of the curve in 2024 is much slower than we saw in 2022. In 2022, we saw real price declines in the second half of the year as home sales were crashing. They’re not crashing anymore so the action with the price cut percentage data is a bit slower than at that time, but growing year over year 

  • 2024: 33.7%
  • 2023: 30%
  • 2022: 21%

The week ahead: Inflation week and housing starts

It’s that time again: it’s another inflation week with CPI and PPI inflation reports. Of course, some of the inflation reports have disappointed the Federal Reserve, so we will keep a close eye on the key numbers in these reports. We also have housing starts data, which is key to the labor markets as 5-unit permits have been in a recession for some time now. I want to see what the apartment completion data looks like because labor is at risk once those apartments under construction are completed. Since we focus so much on the labor data and the direction of mortgage rates, tracking construction workers in each economic cycle is essential.

Source: housingwire.com

Apache is functioning normally

The average for a 30-year fixed-mortgage is 7.36% today, up 0.07% compared to one week ago. The average rate for a 15-year fixed mortgage is 6.76%, which is an increase of 0.06% compared to a week ago. For a look at mortgage rate movement, see the chart below.

Given that inflation data hasn’t been improving, the Federal Reserve has been pushing off rate cuts. Though mortgage rates could still go down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.

Today’s average mortgage rates


Today’s average mortgage rates on May. 09, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.


Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.


How can I choose a mortgage term?

Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.36% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.

15-year fixed-rate mortgages

Today, the average rate for a 15-year, fixed mortgage is 6.76%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 6.82% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.

Why are mortgage rates so high right now?

Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.

Mortgage rates change daily, but average rates have been moving between 6.5% and 7.5% since late last fall. Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.

Will mortgage rates fall in 2024?

Most housing market experts predict rates will end the year between 6% and 6.5%. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates. The central bank could start lowering interest rates in the fall, but it will depend on how the economy fares in the coming months.

Mortgage rates fluctuate for many reasons: supply, demand, inflation, monetary policy, jobs data and market expectations. Homebuyers won’t see lower rates overnight, and it’s unlikely there will ever be a return to the 2-3% mortgage rates we saw between 2000 and early 2022.

“We are expecting mortgage rates to fall to around 6.5% by the end of this year, but there’s still a lot of volatility I think we might see,” said Daryl Fairweather, chief economist at Redfin.

Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates, said Odeta Kushi, deputy chief economist at First American Financial Corporation. “Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates,” Kushi said.

Here’s a look at where some major housing authorities expect average mortgage rates to land.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.

Where can I find the best mortgage rates?

Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.

  1. Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
  2. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
  3. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
  4. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
  5. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.

Source: cnet.com

Apache is functioning normally

My model for inventory growth with higher mortgage rates came crashing down last week. After two weeks of significant increases, inventory growth slowed dramatically and is far from my 11,000-17,000 growth model with mortgage rates over 7.25%. Did the recent dip in mortgage rates play a role here or is this the average choppy weekly data we have seen in past years?  Let’s delve into the weekly data to see what we can uncover.

Weekly housing inventory data

I was looking for a hat trick this week after higher mortgage rates fueled more inventory growth, but that stalled out last week. It’s important to note that the weekly data can be volatile, so I won’t overreact to one week of slow inventory growth data, but it was disappointing to see just 3,453 homes added. Last year, during this same timeframe, inventory fell week to week as well, so always remember that a trend is more important than one week’s data. Note that we do have Mother’s Day weekend next week.

  • Weekly inventory change (April 26-May 3): Inventory rose from 556,291 to 559,744
  • The same week last year (April 28-May 5): Inventory fell from 421,924 to 420,489
  • The all-time inventory bottom was in 2022 at 240,194
  • The inventory peak for 2023 was 569,898
  • For some context, active listings for this week in 2015 were 1,081,867

New listings data

New listing data has been a positive story all year, as we have seen consistent growth from 2023 levels, which saw the lowest recorded levels of new listings ever. I wish new listings were growing faster, but I will call it a victory nonetheless. We saw a slight decline in new listings data week to week. For now, I will chalk this up to the seasonal choppiness we sometimes see with inventory data. Here’s the new listings data for last week over the last several years:

  • 2024: 70,954
  • 2023: 57,682
  • 2022: 76,095

Price-cut percentage

In an average year, one-third of all homes take a price cut — this is standard housing activity. When mortgage rates increase, demand falls and the price-cut percentage grows. When rates drop and demand improves, the percentage falls.

The price-cut percentage growth in 2024 is much slower than in 2022, when rates spiked more aggressively. The second half of 2022 had the biggest and fastest decline in home sales ever, and after November of 2022, the epic home sales crash stopped. This can explain why the slope of the price-cut curve was faster and stronger in 2022 than in 2023 or so far in 2024.  

  • 2024: 33%
  • 2023: 29%
  • 2022: 20%

10-year yield and mortgage rates

We had an exciting week with the 10-year yield and mortgage rates. The Federal Reserve tried to maintain a balanced stance on when the next rate cut would happen, which I talked about in this HousingWire Daily podcast.

Then, the 10-year yield fell after the jobs report showed that wage growth slowed. I wrote about the wage growth slowdown and how that ties into the Fed’s model in my analysis of the jobs report. Looking at all of these factors — the Fed meeting points, the softness in job openings and the jobs Friday data — can explain the decline in yields and mortgage rates last week.

Mortgage spreads have been terrible for some time now, but 2024 is far from the peak stress we saw in this data line in 2023. If we were at the same level as the worst spreads in 2023, mortgage rates would be 0.52% higher currently. So, the spreads getting better this year is a positive storyline. I hadn’t anticipated we would see this until the Fed starts cutting rates, so I got this wrong in 2024.

Purchase application data

Purchase application data didn’t move much again last week, down 2% week to week and 14% year ove year. Remember, for any growth we see in this data line in the future, context is critical since we’re working from the lowest levels ever. 

Since November 2023, when mortgage rates started to fall, we have had 11 positive prints versus nine negative prints and two flat prints week-to-week. Year to date, we have had five positive prints, nine negative prints, and two flat prints.

The week ahead: Bond market digestion 

This week we have a light week on the economic front with jobless claims data, used car prices and some Fed presidents talking. I will be watching the 10-year yield closely. Whenever you have jobs week combined with a Fed meeting, the bond market action can act wild, so I am interested to see how the market reacts after digesting what happened last week.

Source: housingwire.com

Apache is functioning normally

The average for a 30-year fixed-mortgage is 7.34% today, up 0.02% over the last week. The average rate for a 15-year fixed mortgage is 6.74%, which is a decrease of -0.02% from the same time last week. For a look at mortgage rate movement, see the chart below.

Because inflation data hasn’t been improving, the Federal Reserve has been pushing off rate cuts. Though mortgage rates could still inch down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.

Today’s average mortgage rates


Today’s average mortgage rates on May. 06, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.


Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.


What is a good mortgage type and term?

Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.34% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.

15-year fixed-rate mortgages

Today, the average rate for a 15-year, fixed mortgage is 6.74%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 6.74% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.

What should I know about mortgage rates today?

Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.

Mortgage rates change daily, but average rates have been moving between 6.5% and 7.5% since late last fall. Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.

Will mortgage rates drop this year?

Most housing market experts predict rates will end the year between 6% and 6.5%. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates. The central bank could start lowering interest rates in the fall, but it will depend on how the economy fares in the coming months.

Mortgage rates fluctuate for many reasons: supply, demand, inflation, monetary policy, jobs data and market expectations. Homebuyers won’t see lower rates overnight, and it’s unlikely there will ever be a return to the 2-3% mortgage rates we saw between 2000 and early 2022.

“We are expecting mortgage rates to fall to around 6.5% by the end of this year, but there’s still a lot of volatility I think we might see,” said Daryl Fairweather, chief economist at Redfin.

Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates, said Odeta Kushi, deputy chief economist at First American Financial Corporation. “Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates,” Kushi said.

Here’s a look at where some major housing authorities expect average mortgage rates to land.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.

How can I get the lowest mortgage rates?

Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.

  1. Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
  2. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
  3. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
  4. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
  5. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.

Source: cnet.com

Apache is functioning normally

The number one rule of the marketplace is to understand your customer. Knowing what they need, what they want and what they fear is fundamental for success. The housing market has shifted. Today it’s dominated by baby boomers who make up 39% of all homebuyers and 52% of all home sellers.

Known as “Peak 65”, in 2024 more than 12,000 people per day will turn 65. The massive age wave is cresting over the next three years, and by 2030 all boomers will have turned 65. This has baby boomers deeply concerned about retirement, as they are scrambling to prepare for life after work. The expensive and limited housing inventory today has created a scarcity mentality, that has Realtors struggling to provide appropriate housing for an aging population.

The Retirement Trifecta

To retire successfully, to meet the challenges and manage the risks boomers face, they will need to secure their own personal, Financial Trifecta of: 

Income for living, care for aging and housing forever.

These critical needs are the fundamentals of retirement planning, and “Peak 65” demographics will largely reshape housing, real estate and lending for decades to come. 

To understand your boomer customer is to know what they fear most. In this age of longevity, when the boomer generation must plan for decades of life after work, the big fear is running out of money. In my experience of serving boomers for more than four decades, the biggest fear is the loss of their independence, and becoming a burden on their children if they run out of money.

Accommodate the trifecta

Those Realtors, builders and originators who choose to serve this massive market shift, will need to accommodate the Retirement Trifecta. Baby boomers value relationships with those providers, that customize solutions to fit their needs and wants to retire. 

Again, the trifecta is:

  1. Income for living: In retirement, a boomer must establish sufficient and sustainable streams of income to meet the rising costs of living longer, in this new inflationary era.
  2. Care for aging: Aging is a family affair that requires both financial as well as care-giver strategies, with the cash to pay for it. 
  3. Housing forever: Boomers must secure housing that is safe and appropriate for aging, through all the stages of retirement.

Housing costs will likely be the number one expense through retirement. Because 78% of boomers surveyed want to age-In-place, costs of home modification and maintenance will need to be carefully planned out.

Boomers in pursuit of their Trifecta will need us to understand and accommodate the urgent demands of their retirement. A housing professional’s value proposition must extend beyond building and selling homes and originating mortgage loan transactions.  The housing industry must provide real solutions to the challenges that a rapidly growing, elder centric population demands. The industry professionals with the vision to adapt their services will be those who will thrive and help usher in a great new era of American housing.

The housing wealth solution

The baby boom generation has created more housing wealth than any other generation in history. Today, boomers have approximately 13 trillion in available home equity. Boomers home equity will likely grow past 20 trillion by the end of this decade. Today, boomers are living in the very asset needed to help provide for their personal Retirement Trifecta.

To solve the problems we face, and unleash the possibilities of the future, we as an industry must elevate the scope and purpose of our work. We need inspired home-building that includes universal design. We need Realtors trained in matters of aging-in-place, who are committed to guiding senior buyers into buying decisions that will provide housing security for the long-term. We also need a growing professional class of strategic mortgage planners committed to providing home equity conversion solutions that address the demands of the Retirement Trifecta.

From my experience as a home builder, and a mortgage planning specialist, having sat down at more than 4,000 kitchen tables, serving the housing needs of homeowners since 1976, this truth I confidently share with you.

“The single most impactful quality of life decision people make, is the home in which they choose to live.”

Home is where family happens, and we who provide housing have the great privilege, through our life’s work, to make the dreams of those we serve, the possible dream.

To contact the editor responsible for this story: [email protected]

Source: housingwire.com

Apache is functioning normally

Should we elaborate further? Mortgage rates are now topping 7.5%, the highest levels seen this year.  You’d think the sales rate would be slowing, but there aren’t signs of it. It’s possible that sales will slow, but maybe it takes a few more weeks to manifest than expected.

At Altos Research, where we track every home for sale in the country each week, the data so often defies expectations or changes very quickly. By tracking the pricing, supply and demand, sales and changes in the data, you can immediately understand it as it happens. Let’s look at the details of the U.S. housing market at the end of April 2024.

Housing inventory

There are now 556,000 single-family homes on the market. That’s up 2.4% from last week, with slightly more than 13,000 additional properties on the market now than a week ago.

Unsold inventory now is almost 32% higher than at this time last year — and it’s 90% higher compared to the end of April 2022. Two years ago, inventory was jumping along with mortgage rates. But that’s not what’s occurring now as the increases are more steady.

[embedded content]

This is one way to illustrate that consumers are more sensitive to changes in rates than to the actual levels. Rates are higher now, so unsold inventory is higher. But two years ago, rates were climbing by 20 basis points or so each week for much of the spring. Rates were climbing rapidly and so was inventory. Now the increase in both of these lines is slower. 

In 2022, there were record-low numbers of unsold homes on the market, but the numbers were climbing rapidly, with 18,000 to 20,000 properties added each week. Today, we’re adding 13,000 per week. While interest rates and inventory are rising in 2024, they were doing so much more quickly two years ago. The change in rates is what drives change in behavior.

New listings

There were 72,000 new single-family listings unsold this week, Another 21,000 homes were newly listed and already under contract (what are known as immediate sales) for a total of 93,000 new sellers this week. That’s much more than at any point of 2023. You have to go back to July 2022 to find this much seller activity in a given week. 

So, why is the seller volume increasing, where is it coming from and is it time to panic? 

First, keep in mind that immediate sales are still at a reasonably healthy level. Plenty of homes are receiving offers and going into contract immediately upon being listed — 21,000 this week, or 22.5% of the market. 

Next, keep in mind that there are still 20% fewer sellers each week than there would have been in a “normal” year prior to the COVID-19 pandemic. There are not a lot of sellers. It’s just that in the past decade as mortgage rates fell, more real estate began to be hoarded and fewer sales took place. In the accompanying video, you can see the relative levels of new weekly listings. Seller volume is still running pretty low because homeowners have such a good deal with their low mortgage rates that they don’t want to sell. 

Fixed mortgage rates mean fixed costs for most homeowners. Fixed costs theoretically means they won’t ever have to sell. But in areas where costs are rising — due to higher property taxes, insurance hikes or other rising maintenance expenses — homes are more likely to hit the resale market.

Right now, this is most obvious in Texas and Florida. Over the past year, 40% of the inventory increase at the national level has come from these two states. Texas and Florida combine for 29% of the country’s active listings and 16% of its population, so outsized gains are happening in these place. For example, if you have a second home in southwest Florida that you only use occasionally and your insurance costs tripled this year, it’s very tempting to sell. And some people are doing so.

The opposite trend is happening in New York, which has the fewest available homes per capita right now. That dubious distinction is usually reserved for California. New York has slightly fewer homes on the market than at this time last year, whereas Florida now has 59% more. 

The takeaway here is that inventory gains are happening pretty much everywhere but at a significantly higher rate in the Sun Belt states — from Florida to Texas and Arizona. 

Pending sales

There are 398,000 single-family homes under contract now — a few percentage points more on a year-over-year basis. These homes in the pending-sales stage will mostly close in May.

This is slight seller growth but not a pullback, even with April’s mortgage rate increases.

Frankly, this pace could’ve been expected to reverse, but it hasn’t happened yet. In 2022, sales dwindled in the second half of the year and have yet to recover. The video above illustrates how quickly home sales slowed as mortgage rates rose — especially in June and September 2022.

This year, the trajectory is staying surprisingly positive. As the average rate jumped from 7% to 7.5%, that slowdown could’ve been expected to happen again. If the market gets lucky and rates don’t climb past 8%, then the sales rate might continue to slowly recover by later this summer. But rates could keep climbing. The macroeconomic data keeps coming in strong and we’ll just have to watch to see what happens.

There were 76,000 new contracts started this week for single-family homes in the U.S. That’s more than in any week for all of 2023. It’s strong growth — 9% more than the same week a year ago. Sales volume typically peaks at the end of June, so we likely have more growth to come in the spring market. And the weekly new pending sales count is already ahead of the best weeks posted last year.

Home prices

The median price of homes under contract is now slightly more than $399,900, good for 5% year-over-year growth. What’s being tracked here is the final asking price for the homes that went into contract. This is the earliest proxy for the final sales price. Any given home may sell for more or less than asking price, but in aggregate, the actual sales price is very close to this pending sales price.

Altos Data watches several measurements of home prices. There’s asking prices, or what you’ll see if you’re shopping the market today. The median price of all homes on the market right now is just under $445,000 and is only 1% higher than in April 2023. 

The price for a new listing is the best leading indicator, and there are the prices of the set that is being purchased, which is what we’re looking at here. These are all useful indicators of home prices.

Historic data shows, for example, precisely when home prices fell in June and September 2022. At that time, there were large jumps in seller inventory coupled with sudden, additional spikes in mortgage rates. So, homebuyers adjusted their expectations and prices dropped. We’re on the alert for these price declines today but have yet to see them.

Price reductions

While watching for leading indicators for changes in sales prices, we saw a meaningful uptick in price reductions. This week, 32.5% of the homes on the market included a price cut. That’s up 50 basis points from last week and is 340 bps more than at the end of April 2023.

This week last year was the final decline of the spring season. Pricing was much firmer last year, but the share of homes with price cuts in 2024 have increased for 10 weeks. It’s a much slower season compared to last year and spring is when the most upward pressure on home prices typically happens.

But price cuts are on the rise. The curve this year is following a very clear seasonal trend. Home prices are not crashing and there’s no signal anywhere in the data that a crash is imminent. But there are more homes with price cuts now than in April of any recent year, so that’s a pretty weak signal.

In the price reductions chart of the accompanying video, notice how this year’s curve is elevated above that of any recent year. There are more homes on the market with price cuts today than in any April in more than a decade — even though this rate is not climbing nearly as quickly as it did two years ago when the market changed.

If you look at the local data, you’ll see that the Florida markets are dominating in terms of price cuts. More than 50% of the homes on the market in most of the major Florida metro areas have had price cuts. Inventory is up and prices are lower on an annualized basis.  Nationally, however, the data is balanced out by many markets, such as those in the Northeast, where inventory is still very low.

If mortgage rates keep climbing, we could more than 40% of U.S. listings with price cuts by the latter portion of summer. That would likely be a negative indicator for future sales prices — i.e., home price declines. As mentioned earlier, home prices today are higher than they were a year ago (by 1% to 5%, depending on which measurement is used). But the price-reductions trend seems like it is poised to slow down. It looks as if home prices in 2024 will remain flat, at best, although 2023 offered a surprise and that could happen again as this year unfolds.

Source: housingwire.com