The Housing Market Despite being well into the spring homebuying season, the housing market is still experiencing a winter chill. Despite being well into the spring homebuying season, the housing market is still experiencing a winter chill. Housing Market: Despite being well into the spring homebuying season, the housing market is still experiencing a winter chill.
The national average 30-year fixed mortgage rate increased by 18 basis points in May—and another 22 basis points for the week ending June 1—while pending home sales were flat and existing home sales sagged in April. A basis point is one-hundredth of one percentage point.
Though the median existing-home sales price edged lower year-over-year for the third consecutive month—a promising sign for home shoppers—experts don’t expect substantial, nationwide price declines anytime soon.
Thanks to ongoing inventory issues, home prices remain stubbornly elevated, perpetuating affordability challenges for many, especially first-time homebuyers. For one, the nation’s housing supply remains limited—and probably will remain so for at least the near future—due, in part, to those who purchased homes in recent years at record-low interest rates staying put.
Though home prices are not as high as the record prices of June 2022, data suggest that where home prices dip or climb this year remains heavily region-specific.
Housing Market: Despite being well into the spring homebuying season, the housing market is still experiencing a winter chill.
Check out our line of valuation services
Housing Market Forecast for June 2023 The buyer-seller stalemate held steady in May thanks to an uptick in mortgage rates and elevated home prices that together continued to perpetuate the housing affordability crisis, as fears of ongoing inflation, bank sector volatility, debt ceiling drama, and an impending recession hang in the air.
Mortgage rates remain high thanks partly to the Federal Reserve, which voted to raise its key interest rate by 25 basis points on May 3 in its aggressive efforts to tamp down inflation. The May 3 hike was the central bank’s 10th consecutive interest rate increase since March 2022. A Fed rate hike has an indirect impact on long-term home loans, such as 30-year, fixed-rate mortgages.
Since their May meeting, Fed policymakers have expressed divided opinions on raising interest rates at their upcoming June 12-13 meeting. At one point Fed Chair Jerome Powell suggested the tightening credit environment resulting from the recent bank turmoil would function similarly to a rate hike. Yet, Fed watchers are sensing that recent, stronger-than-expected jobs and personal consumption expenditures data along with still-high inflation could prompt the Fed to move forward with yet another rate hike rather than a pause.
These circumstances continue to put a strain on the housing market, which remains a mixed bag.
On the one hand, home shoppers received good news, with the median existing-home sales price declining 1.7% to $388,800 in April compared to a year ago, according to the National Association of Realtors (NAR). This is the third consecutive month of year-over-year national home price declines after a 131-month streak of record increases.
Get a WSJ Renewal Subscription Clicking Here
On the other hand, the latest Federal Housing Finance Agency (FHFA) House Price Index (HPI) shows home prices rose 4.3% in Q1 2023 compared to Q1 2022, culminating in the index reaching a record high of 398.0 in March. The FHFA HPI is a collection of home price indices that measures single-family home values across all 50 states and over 400 cities with data extending back to the mid-1970s.
In the wake of already high-priced homes in most areas of the country still rising in value, it’s no surprise that total existing-home sales dipped 3.4
% in April compared to March. However, sales were up 15.2% compared to April 2022, which reflects the impact of the pandemic on the housing market last year.
Pending home sales, which are a leading indicator of future sales activity, remained flat in April, signaling a potential slowdown in the coming months.
Looking ahead to June 2023, the housing market is expected to face continued challenges. Limited housing supply, high home prices, and rising mortgage rates are likely to persist, making it difficult for many prospective buyers to enter the market.
Additionally, economic uncertainties, such as inflation concerns and the potential for a recession, could further impact the housing market. The Federal Reserve’s decision on interest rates at its June meeting could also influence mortgage rates and affordability.
Overall, while there are some positive signs such as declining median home prices, the housing market is still characterized by tight inventory and affordability issues. It remains important for potential buyers to carefully evaluate their financial situations and work with real estate professionals to navigate the current market conditions.