Increasing home prices and low inventory continue to plague the residential market, new data show.
The national rate of U.S. home prices increased by almost 6 percent from a year earlier, Bloomberg reported based on a report by the National Association of Realtors.
The increase in home prices coupled with mortgage rates’ still hovering around 7 percent is deterring buyers. And although for-sale inventory is going up, the supply is still low by historical standards and far below pre-pandemic levels, the outlet reported.
New-home sales, calculated when contracts close, are considered a more timely measurement than sales of prior-owned homes. And even though contract signings on new single-family homes appeared to be gaining momentum throughout the spring, they dropped nearly 15 percent in May and then unexpectedly declined to a seven-month low in June.
In contrast, listings of previously owned properties in June were at their highest level since October 2020, but transactions of previously owned homes fell for a fourth straight month, according to the publication.
Where mortgage rates go from here will be influenced by economic factors, rates on 10-year Treasury notes, and whether the Federal Reserve cuts interest rates.
Ralph McLaughlin, a Realtor.com senior economist, told Bloomberg that he expects the rate of home price growth to keep slowing for the next several months, but after that, prices will largely depend on what happens to interest rates and “how desperate sellers will become.”
— Christina Previte
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