According to the Realtor.com monthly housing report released This Week in Real Estate May inventory of active listings recorded the first year-over-year increase since June 2019. The number of active listings increased 8% year-over-year, but remained 48.5% below typical levels in May 2020 prior to the pandemic influencing the market. Below are a few newsworthy events from the first week of June that influence our business:
Inventory Stages a Comeback as Home Prices Soar to All-Time High. The real estate refresh continues as new data suggests the housing market hit a turning point in its supply struggle in May. The inventory of active listings has returned, recording the first year-over-year increase since June 2019, according to the Realtor.com monthly housing trends report released today. At the same time, the median national home price soared to an all-time high of $447,000, and buyers snatched up listings a week faster than last year. “Among key factors fueling the inventory comeback are new sellers, who are listing homes at a rate not seen since 2019, as well as moderating demand, with pending listings declining year-over-year in May,” said Danielle Hale, chief economist for Realtor.com. She explained, “While this real estate refresh is welcome news in a still undersupplied market, it has yet to make a dent in home price growth, partially due to increases in newly-listed, larger homes and because the typical seller outlook is quite high, likely shaped by recent experiences of homeowners who sold. Nationally, the number of active listings increased 8% year-over-year in May, but remained 48.5% below typical levels in May 2020 at the onset of the pandemic.
Mortgage Rates Steady at 5% as Housing Supply Increases. Purchase mortgage rates this week averaged 5.09%, essentially flat from the prior week, according to the latest Freddie Mac PMMS. “Mortgage rates continued to inch downward this week but are still significantly higher than last year, affecting affordability and purchase demand,” said Sam Khater, Freddie Mac’s chief economist. “Heading into the summer, the potential homebuyer pool has shrunk, supply is on the rise and the housing market is normalizing. This is welcome news following unprecedented market tightness over the last couple years.” Economists forecast the tightening monetary policy will reduce origination volume significantly in 2022 and 2023. The MBA expects loan origination volume to drop more than 35% to about $2.5 trillion this year, from last year’s $4 trillion. Meanwhile, the MBA expects 5.93 million home sales in 2022, compared to 6.12 million in 2021.
Economists and Real Estate Pros on What The Housing Market Will Look Like This Summer. Home prices have been climbing, as have mortgage rates, and many buyers are wondering: What’s in store for us this summer? While listing prices have shown acceleration or a faster rate of growth, in recent weeks, sales prices have seen steadiness or slight easing in momentum. “This suggests that home prices could be at a bit of a turning point, in which slower growth is on the horizon,” says Danielle Hale, Realtor.com chief economist. Greg McBride, chief financial analyst at Bankrate, says: “The market will cool somewhat as more would-be homebuyers have been priced out by rising home prices and soaring mortgage rates, but even a tempered level of demand will still exceed the ultra-low level of supply. The pace of home price appreciation will moderate but homes will still be selling for much more than they did six or 12 months ago, even if sellers don’t get the moonshot price they’re currently asking.”
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