The U.S. housing market is experiencing a significant rebalancing, marked by a notable increase in new listings and active inventory. This represents a big change and is opening up a lot more potential home-buying options, Danielle Hale, chief economist for Realtor.com told Fortune. The most recent data indicates that new listings are up 10% from March of last year. At the same time, active listings jumped by nearly 28% over the same period.
Mortgage rates have seen a decline, with the average rate on a 30-year fixed loan dropping 12 basis points to 6.63%. The yield on the 10-year U.S. Treasury is down about 70 basis points from that point. This drop is at least in part behind falling mortgage rates. Jacksonville and Miami have seen some of the largest drops in mortgage rates. Jacksonville experienced an average decrease of 15.1%, with Jacksonville mortgage rates falling by an average of 13.7%.
Regardless of these positive trends for purchasers, the economic environment is still tough. U.S. homebuyers continue to struggle with affordability, as the typical monthly payment now stands at an all-time high of $2,802. This high point has been maintained for the second week in a row. Yet about 70% of U.S. households—nearly 94 million—would not be able to afford the average home price of $400,000. In addition, about 52.87 million households earn enough to afford homes only up to $200,000.
Hale noted that “the high cost of buying coupled with growing economic concerns suggest a sluggish response from buyers in early spring.” She was sure to point out that even with the increased market accessibility referred to in their report, the market still presents challenges for many future homebuyers.
Pending sales are down by 5.2% compared to last March. This drop is indicative of signed contracts on previously owned homes across the country’s largest metro areas. This drop is an ominous sign that even with more inventory coming onto the market, buyer demand could not be matched.
As Matt Ferris, a local real estate agent put it, “We’ve gone from the hunter to the hunted. He stated, “Supply is picking up. A lot of people I’ve spoken to over the last year or two are calling, saying they’re ready to list their house.” He further emphasized that a lot of the selling pressure is driven by sellers focused on economic uncertainty and job security fears.
“Some believe we’re at the top of the market, and they want to get top dollar for their house. Here in the D.C. area, some people are selling because they’re worried about losing their government job, or because they want to buy closer to the city due to in-office policies.” – Matt Ferris
Further down the road, the National Association of Home Builders has some optimistic forecasts. They project that the median price of a new home will climb to approximately $460,000 by 2025. This latest forecast highlights the persistent affordability crisis as home prices have grown significantly faster than incomes for the large majority of households.