The U.S. housing market is seeing record-breaking prices blended with early signs of a cooling trend.
The median sale price of a home in the United States hit an all-time high of $394,000 during the four weeks ending June 9. That’s up 4.4% year over year — the biggest increase in about three months, according to a report from real estate brokerage Redfin.
However, indications are emerging that the rapid home price appreciation seen over the last few years is approaching its peak, suggesting a shift toward a more balanced market. About 6.5% of home sellers are dropping their asking prices — the highest proportion seen since November 2022.
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Prices in Portland, Oregon and cities in Texas, including Austin, Fort Worth, and San Antonio, have already started to drop.
Mortgage rates are expected to decline more over the summer, potentially preventing monthly housing costs from escalating again. On June 12, daily average mortgage rates reached their lowest point in three months following the latest consumer price index report, which indicated a continued cooling of inflation.
Although the Federal Reserve projected just one interest rate cut for this year during its June 12 meeting, it’s possible it hadn’t fully accounted for the recent inflation data and could update the forecast at the next meeting.
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“The latest inflation report is good for homebuyers because it has already sent mortgage rates down, though this week’s Fed meeting will temper mortgage-rate declines,” said Chen Zhao, Redfin’s economic research lead. “But on the other side of the coin, if lower mortgage rates bring back more demand than supply, that could erase the possibility that home-price growth softens and push prices up even further. Lower rates and higher prices may ultimately cancel each other out when it comes to homebuyers’ monthly payments.”
Soaring home prices and elevated interest rates keep some prospective buyers on the sidelines. Pending home sales dropped 3.5% year over year — their biggest decline in three months.
One promising indication of demand is that mortgage purchase applications are up 9% week over week. New listings are up 7.8% year over year, but they’re lower than typical spring levels, which is why home prices continue to rise.
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This article U.S. Home Prices Hit Record High As Mortgage Rates Start To Decline originally appeared on Benzinga.com
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