- Sales of previously owned homes decreased 4.3% from the prior month.
- 30-year fixed mortgage jumped by nearly a quarter percentage point to 7.1%
The U.S. housing market is coming under renewed pressure, buffeted by mortgage rates that rose above 7% again and uncertainty over changes to the commission system for buying and selling a home.
The average rate on the standard 30-year fixed mortgage jumped by nearly a quarter percentage point to 7.1%, according to a survey of lenders released Thursday by mortgage-finance giant Freddie Mac. That is the highest level since late 2023 and the largest weekly increase in nearly a year.
Low inventory continues to fuel competition among area buyers in Western Washington However. Despite slight year-over-year increases in inventory levels, thanks to a 1.6% uptick in new listings across the region, the market still sat at a 1.6-month housing supply in March — well below the four to six months seen in a balanced market.
The housing market’s recent turbulence is cutting short a positive start to the year. Sales tumbled to their lowest level in nearly 30 years in 2023. But they rose during the first two months of this year as a number of buyers took advantage of a decline in mortgage rates to resume their home search. Active listings ticked higher and real-estate showings picked up in January.
Mortgage rates started to rise again in February, weighing on March sales. The recent spike in borrowing costs could drag affordability back to the historic lows it reached last year. Home prices are near record highs. Other costs to own a home, such as insurance premiums, property taxes and maintenance, have skyrocketed, too.
Home buyers are also confused about coming changes to the rules governing how real-estate agents get paid, and whether those changes could increase or decrease their overall costs. NAR reached a historic settlement of claims last month that the industry conspired to keep agent commissions high. The new rules are expected to make it easier for home buyers to negotiate fees with their own agents.
That could prompt some home shoppers and sellers to pause until there is more clarity when the new rules go into effect in July.
You’ve probably heard the news that there are changes coming in terms of how real estate commissions are paid. And while the seismic settlement announced by the National Association of Realtors earlier this month has not yet been approved it’s already sending shockwaves through the real estate industry.
The combination of higher rates and uncertainty about the new commission structure now threaten to halt momentum during the crucial spring home-buying season, which is typically the housing market’s busiest time of year.
“There’s so many mixed signals now in the market that for many people, it’s just too much,” said Selma Hepp, chief economist at CoreLogic. “I think they’re just sitting it out.”
While many economists expect rates to decline later this year, stronger-than-expected inflation data last week could prompt Federal Reserve officials to hold rates at their current level for longer. That’s pushed up the yield on 10-year Treasurys, which mortgage rates tend to track.
A persistently low supply of homes for sale is also pushing prices higher. Median home prices increased by 7.4% year over year to $633,717, up from $590,000 in March 2023. The highest median sales prices were seen in King ($850,000), San Juan ($750,000) and Snohomish ($730,000) counties, while the lowest median prices were seen in Pacific ($347,500), Grant ($325,000) and Columbia ($274,000) counties.
Buyer Broker compensation is now fully negotiable just like it was always meant to be!
“Home sales are essentially stuck,” said Lawrence Yun, NAR’s chief economist. “We need more inventory, definitely.”
On an annual basis, existing home sales, which make up most of the housing market, fell 3.7% in March.
Economists surveyed by The Wall Street Journal estimated sales of previously owned homes fell a seasonally adjusted 4.8% in March from February.
The costs of buying a home are also outpacing the increases in rent, making it relatively cheaper to rent.
The average monthly new mortgage payment was 38% higher in the U.S. than the average apartment rent at the end of 2023, according to an analysis by CBRE. That premium has been in the double digits for two years.
“It’s never been this high for this long,” said Matt Vance, senior director and Americas Head of Multifamily Research at CBRE. “It doesn’t seem likely that it will come down any significant amount in the next several years.”
The supply of homes for sale rose in March but was still 37.9% below typical prepandemic levels, according to Realtor.com.
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