Amid all the bad news in the real estate market, there is a silver lining, according to Realtor.com.
But first, here’s a taste from the bucket of bad news.
The 30-year fixed-rate mortgage averaged 5.27% in the week ended May 5, a 12-year high, according to Freddie Mac. The rate increased from 5.1% a week earlier and 2.96% a year earlier.
“Mortgages now compared to just a few months ago are costing more money for home buyers,” Lawrence Yun, chief economist of the National Association of Realtors (NAR), said in a recent speech.
“For a median-priced home, the price difference is $300 to $400 more per month, which is a hefty toll for a working family.”
In addition to the increase in mortgage rates, home prices soared 19.8% in the 12 months through February, according to the Case-Shiller home price index. The median existing home price hit a record $375,300 in March, according to NAR.
Homes 55% More Expensive
NAR estimates that purchasing a home is now 55% more expensive than it was a year ago. Although wages are rising, the increases are being “wiped away” by inflation, Yun said. Average hourly wages climbed 5.5% in the 12 months through April.
The outlook moving forward isn’t pretty, Sam Khater, Freddie Mac's chief economist, said in a statement.
"While housing affordability and inflationary pressures pose challenges for potential buyers, house price growth will continue,” he said.
On the bright side, that ascent “is expected to decelerate in the coming months," he said.
Yun expects higher mortgage rates to slow the housing market, citing a five-month decline in pending home sales and a drop in new single-family home sales.
The good news: Though “sellers are still listing fewer homes in general than they did prepandemic, the numbers are inching upward, according to an analysis of 4 of the 5 weeks ending in April,” Realtor.com reports.
The inventories of homes for sale rose in eight out of the 50 largest metropolitan areas compared with 2020. To be sure, that means inventory fell in more than 80% of the 50 metro areas.
In any case, the biggest increases came in metro Riverside, Calif., an hour east of Los Angeles, up 23%; Austin, up 17%; and Sacramento, California's capital city, up 12%, according to Realtor.com.
“It’s hard to nail down exactly what’s causing inventory to loosen a little,” Compass agent Paul Reddam of Austin told the housing information service.
“This is typically the peak of Austin’s real estate cycle, when we would normally see more homes on the market, so that is part of it.”