Hope ‘springs’ eternal for the housing market

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Published Date 4/10/2023

When mortgage rates tick down, which they did again this last week, many in the housing industry try to muster up hope for a breath of new life for the spring housing market. Is that hope justified?

Realtor.com’s Andrea Riquier reports that while the interest rate for a 30-year fixed-rate home loan sank a bit, it’s still much higher than a year ago, when rates were below 5%. “Compared to the recent 7% average rate peak, the latest rate saves $140 per month for a homebuyer on a $300,000 loan,” says National Association of Realtors® Chief Economist Lawrence Yun, who is optimistic that rates will continue this downward trend.

“Though week-to-week rate changes can move up and down, the longer-term prospect on rates is for further improvement, with a clear possibility of going under 6% by the year’s end,” adds Yun.

While this reprieve should come as a relief to homebuyers who’ve been sitting on the sidelines this spring it’s not all good news, by far. Analysts say the spring season presents a mixed bag of trends for both homebuyers and sellers, Because listing prices are still higher than last year, although barely so, growing by just 4.4% — the slowest pace since June 2020. Still, it could slow further.

Realtor.com economists have been forecasting a true price decline by the summer, and the national median sales price (what buyers and sellers agreed on) has already begun to fall for the first time in over a decade. But with listings hovering at a median asking price of $428,000, it’s anyone’s ball game. And that ball game is seeing fewer homeowners listing their homes for sale.

“Lower levels of fresh new home listings continue to constrain home sales, which continue to remain at low historical levels,” says Realtor’s economic data manager Sabrina Speianu. And while the total number of real estate listings is up by 53% compared with a year earlier, many of these housing options are stale—picked and passed over already. On average, listings lingered 18 days longer than at this time last year with some idling longer — 35 weeks in a row. This is an indication that buyers aren’t impressed by their options.

Hope still springs eternal for the industry, however. Open houses, rising temperatures and dwindling mortgage rates may help turn the tide. “It is expected that time-on-market will continue to decrease this spring as we head toward the annual best time to sell a home in mid-April,” Speianu says. “Nevertheless, sellers will need to adjust their expectations and pricing to account for the current market conditions.”

Realtor, TBWS

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