Mortgage rates rose further this week, with a 30-year fixed-rate loan averaging 6.79%. This is a considerable increase over the previous week’s rate of 6.57%.
As if that weren’t enough to make purchasers’ hearts skip a few beats, many are discovering relatively few new listings on the market—and the few that are for sale are being swarmed by desperate buyers, despite high-interest rates.
Fight for Fresh Listings
For the past 47 weeks, newly listed properties have declined compared to the prior year. The number of new listings was down in the week ending May 27 compared to last year, causing what Hale calls a “drag on home sales.”
Anyone recently looking at mortgage rates would understand why sellers are sticking put. Existing homeowners, who benefit from mortgage rates significantly lower than current rates, are hesitant to list their properties, resulting in a lag in new listings.
Homebuyers desperate to look at these old postings again may find a reasonable price, even if it isn’t the perfect dream home they’ve been looking for.
Mortgage Rate Rise
Mortgage rates are rising once more, with the cost of a house loan reaching its highest level in seven months.
The average 30-year mortgage rate is currently 6.91%, up from 6.69%, according to the Mortgage Bankers Association (MBA). The average 15-year mortgage rate rose 6.41% from 6.15% a week ago.
Buying a home is less expensive than renting in only four U.S. cities. Mortgage rates are rising mainly because the Federal Reserve’s year-long drive to cool inflation by raising its benchmark rate has yet to put inflation close to the central bank’s 2% objective, implying that additional hikes may be required.
Depending on the loan amount, a percentage point increase in a mortgage rate might add hundreds of dollars to a property’s monthly payments.
Home prices are growing as well. Realtor.com said the median list price increased to $430,000 in April, up from $406,000 at the start of the year. Buying a home is less expensive than renting in only four U.S. cities: Cleveland, Detroit, Houston, and Philadelphia.
The Number of Homes for Sale Remains Tight
Real estate experts say there are fewer possibilities for house hunters, partly due to building companies’ inability to keep up with demand and homeowners’ unwillingness to offer their property.
According to the Federal Reserve Bank of St. Louis, home builders built only 70,000 new dwellings in April. According to Realtor.com, the U.S. currently faces a 6.5 million home shortage.
Despite these challenges, and after plummeting to its lowest level in 50 years during the pandemic, homeownership in the United States is on the rise, notably among low-income people. According to recent Census Bureau data, more than 53% of households earning less than the median income owned property as of early 2023.
The recent increase in mortgage rates, reaching their highest levels in months, is causing hesitation among sellers benefiting from lower interest rates on their existing mortgages. As a result, new listings have been declining, creating a shortage of available homes on the market.
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