Mortgage Rates and Home Sales

Higher mortgage rates are putting a damper on the selling season. Read more from NAR’s latest housing report.

Despite a modest uptick in home sales, uncertainty continues to cloud the housing market. Elevated mortgage rates and economic headwinds may be leaving some would-be home buyers hesitant, even as the inventory of for-sale homes improves and buyers find they have more negotiating power in some markets.

Existing-home sales—completed transactions for single-family homes, townhomes, condos and co-ops—eked out a slight increase in May compared to April, up 0.8%, but remained down 0.7% compared to a year ago, the National Association of REALTORS® reported Monday. The tepid sales activity comes during what is typically a busy time for real estate.

“The relatively subdued sales are largely due to persistently high mortgage rates,” says Lawrence Yun, NAR’s chief economist. “Lower interest rates will attract more buyers and sellers to the housing market.” The 30-year fixed-rate mortgage averaged 6.81% last week, according to Freddie Mac, and rates have hovered in the mid- to high-6% range for several weeks, straining some buyers’ budgets.

Prices Still Rising, But Moving at a Slower Pace

For home sellers, home prices continue to increase, with the median existing-home sales price in May at $422,800, up 1.3% year-over-year, NAR’s latest report shows. It marks a record high for home prices for the month of May. Higher prices in the resale market are putting existing-home prices more in line with newly built home prices, which one economist recently noted is an “unprecedented” shift.

Mortgage Rates & Home Sales continue to read here!