Mortgage rates have surged above 7 percent as home prices have fallen by their largest amount since 2011. Zillow’s home value and sales forecast shows that prices may start rising for the rest of the year. According to the National Association of Realtors, data from the last three decades suggest buyers are much more likely to move in the spring and summer peak seasons.
The warmer seasons typically make up the large majority of the sales activity throughout the year, especially for homes in the Northeast, where nearly 66 percent of the activity occurs during the peak seasons. Despite the expectation for homes to increase with current trends, home prices have fallen for the first time in the month of June for the first time in six years. It’s also been the first time there were fewer active listings compared to a year ago, in more than a year.
Home prices have declined in June even though nearly one-third of all homes are still selling above the listed price, and homes listed are still receiving on average 3.3 offers, while 25 percent of buyers are bringing in all-cash sales.
New listings were also down 29 percent this week from a year ago, leading to a stagnation in the prices of homes even though seller sentiment is much more optimistic regarding prices of their homes.
Home prices may also cease to fall due to the fact there are so few properties in the marketplace. The number of homes on the market since June are down 47 percent from the typical amount prior to the start of the COVID-19 pandemic. In March, new homes under construction also accounted for 33 percent of homes listed for sale, which has increased from 2000 to 2019, when that share of homes only account for 13 percent of all homes for sale, according to the National Association of Home Builders.
About 91.8 percent of mortgage homeowners have a rate that is below 6 percent. Instead of selling, mortgage holders are deciding to stay put, and as a result, fewer homes are sold. This is backed by the fact that about 27 percent of homeowners considering to list their home in the next year would feel more urgent to list their homes if rates dropped to 5 percent or below. The amount of mortgage holders living in their house for four years or less has also hit a record share.
