Finally, some good news on the housing front for buyers … well, sort of.
Home inventories, as measured by active listings, soared at a record-high year-on-year rate of 31% in July, according to Realtor.com. That marks the third straight all-time monthly peak.
The good news is this means more homes from which prospective buyers can choose.
The bad news? It reflects the unaffordability of homes for many would-be buyers.
“The U.S. housing market continues to move toward more evenly balanced supply and demand compared to the 2021 frenzy,” Danielle Hale, Realtor.com’s chief economist, said in a statement.
“Our July data shows elevated mortgage rates left many buyers tightening their budgets and sellers responding with price reductions, while home shoppers who kept searching saw more available options.”
The 30-year fixed-rate mortgage averaged 4.99% in the week ended Aug. 4. That’s down from 5.3% a week earlier but still up from 2.77% in the year-earlier week, according to Freddie Mac.
New ListingsMeanwhile, “new listings declined in July, suggesting that some prospective sellers are wondering what recent market shifts mean for their plans to list,” Hale said.
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“But data indicates that homeowners grappling with this decision are still in a good position in many markets, with buyer interest keeping well-priced homes selling quickly.”
In addition, “many sellers have a substantial equity cushion to leverage, thanks to the past decade of rising prices,” she said. “Whether or not they take advantage of these opportunities will be key to inventory trends moving forward.”
Another piece of good news came from a New York Federal Reserve Bank consumer expectations survey. That report showed that the median expected increase in home prices one year from now dropped to 3.5% from 4.4% in June and 6% in January.
That’s the third consecutive decrease and the lowest reading since November 2020.
Weak Purchase SentimentOn the bad news side, Fannie Mae’s Home Purchase Sentiment Index fell 2 points in July to 62.8, its lowest level since 2011. Only 1 of every 6 consumers (17%) surveyed say it’s a good time to buy a home. At the same time, two-thirds (67%) say it’s a good time to sell, down from three-quarters (76%) in May.
“The Sentiment Index has declined steadily for much of the year, as higher mortgage rates continue to take a toll on housing affordability,” Doug Duncan, Fannie Mae’s chief economist, said in a statement.
To be sure, “with home-price growth slowing, and projected to slow further, we believe consumer reaction to current housing conditions is likely to be increasingly mixed,” Duncan said.
“Some homeowners may opt to list their homes sooner to take advantage of perceived high prices, while some potential homebuyers may choose to postpone their purchase decision, believing that home prices may drop.”
Bottom line: The index results “appear to confirm our forecast for moderating home sales over the coming year,” Duncan said.