By Margaret Heidenry
All eyes have been glued to mortgage rates lately as those all-important fees continue their seemingly inexorable upward march.
While average rates for a 30-year fixed-rate mortgage dipped to 6.95% last week, that figure climbed back to 7.08% for the week ending Nov. 10, according to Freddie Mac.
And if inflation refuses to budge, “mortgage rates are more likely to climb than to slip,” says Realtor.com® Chief Economist Danielle Hale in her analysis.
Yet while interest rates are up, nibbling away at affordability, at least another key metric is heading down to at least partly make up for it: home prices.
We’ll look at what this means, and just how low prices may go, in this week’s installment of our real estate column “How’s the Housing Market This Week?”
The latest statistics on home prices
Indeed, the median list price for a typical home peaked at $450,000 in June, and has since dropped in October to $425,000. And home prices will likely continue downward toward the holidays, although perhaps not as low as many homebuyers might like.
“The typical asking price will near but not likely slip below $400,000 again this year,” explains Hale. “The housing market is resetting, but in a slow fashion.”
And while home prices have been decreasing month to month, they’re still higher than last year. For the week ending Nov. 10, home prices rose by 11.7% compared with the same week a year earlier.
That’s the 45th week straight of double-digit growth, although the pace has at least been ebbing, which means that home shoppers might not have to contend with double-digit price hikes much longer.
“Continuing at its recent pace of slowing, median listing price growth would move back into single-digit territory just before the end of the year,” says Hale.
Why buyers and sellers are both in a ‘wait and see’ mode
With home prices falling, many home sellers are hunkering down into deep hibernation.
For the week ending Nov. 10, new listings—or how many sellers are putting homes up for sale—dropped by a staggering 20% compared with that same week last year. Indeed, the number of owners listing their homes has now declined 18 weeks in a row.
“This data suggests that many potential sellers may be joining buyers in ‘wait and see’ mode,” explains Hale.
Sellers and buyers are sitting on the sidelines for the same reason: Neither side wants to deal with the volatile housing market.
How the market’s ‘slow reset’ leads to stale listings
Yet while the number of new home sellers entering the market has plummeted, the total number of homes for sale—which includes old listings that have been kicking around for months without buyers—is on the rise. Indeed, inventory rose by 42% for the week ending Nov. 10 over the same week last year.
And these stale offerings are only getting staler. In October, homes spent a median of 51 days on the market. And for the week ending Nov. 10, homes lingered on the market an entire week longer compared with the same period last year. This marks the 15th straight week of ever-more-sluggish home sales.
Overall, this means that homebuyers can take more time now to decide whether to make an offer. But they still don’t yet get to enjoy the languorous pace of pre-pandemic 2020 home shoppers, who had an extra 20 days to make an offer than buyers do now.
“In other words, the market has slowed relative to peak buying season and relative to last fall,” adds Hale. “But compared to just about any other time period, homes are still selling relatively quickly.”