These are volatile days in the mortgage market, says at least one expert, the pace of price increases has slowed, and some sellers are holding fast to their properties as prices begin to decrease.
Would-be sellers are reluctant to list their homes as they have begun to see prices come down, according to Realtor.com. There are fewer listings, so demand has begun to stabilize.
Nationally, those sellers who are listing are more and more willing to “meet buyers where they are,” said the site.
For the week ending August 25, 30-year mortgage rates rose to 5.55%, according to Freddie Mac. That’s down from a 2022 high of 5.81% but up from 3.22% at the start of the year.
Last year at around the same time, the rate was at 2.68%.
As numerous sites have reported, new listings of homes for sale have fallen 15% in the four weeks ending August 21, the biggest annual decline since the start of the pandemic, with fewer sellers and buyers in the market due to rising mortgage rates and economic uncertainty.
The supply of for-sale homes fell 0.6% from the previous four-week period, only the second time total supply has dropped from the prior four-week period since February, partly a reaction to reduced demand and falling prices.
“Sellers are coming to terms with the fact that volatile mortgage rates have dampened demand,” said Redfin Economics Research Lead Chen Zhao recently “Some sellers are pricing lower, and some homeowners are staying put because they’re nervous they won’t get a good offer or they’re hesitant to give up their low mortgage rate.
“Because the number of homes for sale is no longer rising,” Zhao continued, “buyers’ newfound bargaining power is reaching its limit. It’s worth noting that early demand indicators such as tours and requests for help from agents are elevated from their June lows and remain steady. So there is a pool of interested buyers out there, but sellers need to price fairly to attract them. If more sellers and buyers find that middle ground on price, we could see sales strengthen a bit.”
According to Mortgage News Daily, after trading rates up to the highest levels in years roughly 4 months ago, rates have “bounced around in a volatile, but still mostly sideways range. Mid June was the worst of it while late July was the best. There was more than a full percentage point of difference between those two time frames in terms of 30yr fixed mortgage rates.”
The number of mortgage applications has also decreased 1.2% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending Aug. 19.
“Mortgage applications continued to remain at a 22-year low, held down by significantly reduced refinancing demand and weak home purchase activity, Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in the release.
At the same time, according to Realtor.com, those who are listing their homes are starting to price in line with lower demand. The median asking price of newly listed homes dropped 5% from the record high set in May, while sale prices dropped 6% from June’s record high level.
For-sale homes with a price drop have stabilized after rising throughout the spring and early summer.
