Articles

By Julie Taylor

Aug 8, 2024

Mortgage rates sank this week, with the average rate for a 30-year fixed home loan going from 6.73% last week to 6.47% for the week ending Aug. 8, according to Freddie Mac.

“Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move.”

This drop in rates of late is significant enough to translate into “real savings” on a monthly housing payment, according to Realtor.com® Chief Economist Danielle Hale in a recent analysis. However, she notes that “buyer traffic and market competitiveness may amp up if mortgage rates remain low,” adding that “recession worries could limit some of the potential gains.”

With serious financial changes afoot, what will the housing market look like as the summer turns into fall? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest installment of “How’s the Housing Market This Week?”

Mortgage rate predictions

As the economy cools and the Federal Reserve gets closer to its target inflation rate of 2%, investors have upped their expectations to two rate cuts this year.

As a result, buyers and sellers might see mortgage rates drop in September and December, according to Realtor.com senior economist Ralph McLaughlin. (While the Fed doesn’t set mortgage rates, the two numbers often move in the same direction.)

“Mortgage rate relief is arriving quicker than many expected, and the recent downward trend is encouraging news for potential homebuyers who have been waiting until next year to participate in the market,” says McLaughlin.

However, even though rates are in flux, they remain above 6%—which still exceeds existing mortgage rates for 86% of outstanding borrowers and could deter sellers from selling—and slow down buyers as well.

Home prices fell slightly

Median list prices fell 0.7% year over year for the week ending Aug. 3, and marked 28 consecutive weeks of annual price growth below 1%. (In July, the national median list price was $445,000.)

This downward trend in list prices differs from actual sales prices, which shot up 4.1% in June, according to the National Association of Realtors®.

A shift in the mix of homes for sale might explain this disparity, as smaller homes pushed the price per square foot up 3.1% in July, even though the median price held relatively steady.

However, “actual sales have shifted toward more expensive—and likely larger—homes,” Hale says, which explains the bump in sale prices.

The number of homes for sale increased

The total number of houses for sale increased by 35.9% for the week ending Aug.  3, marking a 39-week streak of growing for-sale homes compared with a year ago.

Fresh listings shot up by 6.7% for the same period, giving buyers more choices as the summer housing market draws to a close.

“More homes for sale is a much needed, buyer-friendly trend,” says Hale.

In addition, the increase in affordable inventory might be enough to draw in some buyers to the market this fall.

“Looking ahead, we expect this year’s elevated inventory to be able to absorb an unexpected demand that may come from falling mortgage rates this fall,” adds McLaughlin. “As such, we don’t expect home price growth to deviate much, if at all, from a stabilized trajectory.”

The pace of the market continues to crawl

Homes spent five days more on the market for the week ending Aug. 3 compared with this time last year. (The typical home spent 50 days on the market in July.)

Elevated prices and mortgage rates have caused buyers to stall and forced sellers to have more patience.

“For a 13th straight week, the time a home spent on the market was longer than at the same time last year, and the gap has been widening,” says Hale.

A slower time on the market is generally indicative of a market balance shifting in a buyer-friendly direction.

“Homebuyers this year may continue to contend with high prices and mortgage rates,” Hale explains. “But they’re starting to get some time back on their side compared to last year.”

Yet sellers also continue to be in a good position.

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