Monday, June 10, 2024 / by Richard Eimers
WEEKLY MORTGAGE RATES DIP, HOME PRICES SOFTEN
By Richard Eimers June 10, 2024The housing market is showing signs of cooling down as mortgage rates remain elevated, and home buyers grapple with affordability challenges. According to the latest data, average mortgage rates ebbed this week, but not enough to provide significant relief for prospective homebuyers. Meanwhile, national home prices continue to rise, albeit at a slower pace compared to the past few years.
Mortgage Rates Ease, but Remain High
The average rate on the 30-year fixed-rate mortgage fell to 6.89% in the week ending June 6, down from the previous week's 7.02% average. While this dip in mortgage rates is a welcome development, it may not be enough to entice many buyers back into the market. Rates above 7% have been blamed for slowing down the spring homebuying season, as they have significantly impacted affordability for many households.
Despite the latest ease in mortgage rates, home buyers haven't been flooding back to the market. Mortgage applications for home purchases—viewed as a gauge of future homebuying activity—fell 2% in the latest week and are down 14% from a year ago. The biggest pullback has been seen in Federal Housing Administration loan applications, which tend to be favored by first-time or low-income buyers.
Home Price Growth Slows, but Remains Positive
On the home price front, the latest data shows that national home sale prices rose 5.3% year-over-year in April and were up 1.1% from the prior month. While any price increase is tough on home buyers, the recent gains are softer than the year-over-year price jumps seen in the last few years.
This moderation in home price growth is likely a reflection of buyers' response to high mortgage rates and the anticipation that rates may eventually fall. As affordability challenges persist, many potential buyers are opting to stay on the sidelines, leading to a slowdown in demand and, consequently, a cooling of home price appreciation.
Outlook for the Destin, Miramar Beach, Santa Rosa Beach, and Inlet Beach Markets
Looking ahead, industry experts predict that home price growth will continue to slow down, with projections suggesting a 3.4% increase by next spring. This price softening is expected to be more pronounced in markets where affordability has become a significant concern, such as the Destin, Miramar Beach, Santa Rosa Beach, and Inlet Beach areas of Florida.
While the current market conditions may be challenging for buyers, there are potential opportunities for those who can navigate the landscape. As one real estate agent noted, "Sellers know that high mortgage rates mean they should expect negotiations, expect offers to come in under list price, and be ready for some back and forth on things like repairs and closing costs." Buyers may not be able to secure lower mortgage rates, but they could potentially negotiate better deals on home prices or other concessions from sellers.
Additionally, the slowdown in the market may present opportunities for buyers interested in fixer-uppers or lower-priced properties, as these segments may experience less competition and potentially more favorable pricing.
As the housing market continues to evolve, it's essential for both buyers and sellers to stay informed and work closely with experienced real estate professionals who can provide guidance and insights specific to their local market conditions.
