Mortgage rates have declined for the third consecutive week, offering some relief to Americans navigating a challenging housing market. The standard 30-year fixed-rate mortgage averaged 6.94% in the week ending May 23, which is the lowest level since early April and below the key 7% threshold. Mortgage rates began to climb in late April after moving sideways throughout March, as economic data indicated that inflation’s slowdown had stalled earlier in the year. Bond yields have mostly retreated this month as the Consumer Price Index for April showed that inflation did not increase, providing some hope for lower mortgage rates in the future.
Despite the possibility of the Federal Reserve cutting interest rates this year, the housing market’s recovery remains stagnant. Sales of previously owned homes fell in April for the second month in a row, contrasting with earlier in the year when sales were soaring. Mortgage rates are down from a two-decade peak reached last fall, but they are still higher than any rates seen in the decade leading up to 2022. Another issue impacting the housing market is the under-supply of housing, with homeowners choosing to hold onto low mortgage rates and not sell their homes. The pace of residential construction is not easing the pressure on the market, with Lawrence Yun of the NAR stating that around 1.6 million housing units are needed for several years to achieve balance.
Home prices remain unaffordable for many Americans, particularly first-time buyers, as prices continue to rise. NAR reported that the median price of an existing home in April was $407,600, a 5.7% increase from a year earlier and a record for April prices. High borrowing costs, rising prices, and limited housing inventory are creating challenges for buyers. President Joe Biden has proposed solutions to improve affordability, such as tax credits for middle-class buyers and legislation to support homebuilding, which would require congressional approval. The housing market continues to face difficulties despite some improvements in housing inventory in recent months.
The housing market is still facing challenges, with high home prices and limited inventory impacting buyers’ ability to enter the market. President Joe Biden has proposed solutions to improve affordability, including tax credits for middle-class buyers and legislation to support homebuilding. Despite some improvements in housing inventory in recent months, the housing shortage remains a persistent issue. Lawrence Yun of the NAR stated that around 1.6 million housing units are needed for several years to achieve balance in the housing sector. While some progress has been made, the housing market continues to face obstacles in terms of affordability and inventory.
