As mortgage rates begin to decline, the U.S.’s most expensive housing markets, including Seattle and Silicon Valley, are experiencing a rise in the number of homes listed for sale. This trend comes as the median home sale price remains close to record highs, driven partly by a historically low inventory of available properties. In June, the median sale price reached an all-time peak of $426,900.
Data from Realtor.com reveals that new home listings surged by 4.2 percent in September, marking the most significant annual increase since the peak of the spring homebuying season. Active listings in September were 34 percent higher compared to the same month last year, highlighting the impact of this uptick in supply.
Key metropolitan areas such as those around Seattle, San Jose, and Washington D.C. played a crucial role in this increase in newly listed homes.
The recent shift in mortgage rates followed the Federal Reserve’s decision to cut interest rates last month, the first reduction in over four years. The federal funds rate, previously at a 23-year high, dropped by half a percentage point to a range of 4.75 to 5 percent.
The Fed raised the benchmark rate 11 times in 2022 and 2023 to combat soaring inflation that affected the U.S. and global economies following the COVID-19 pandemic. While the Fed does not directly control mortgage rates, a reduction in the federal funds rate typically leads to lower borrowing costs for consumers, including mortgages, auto loans, and credit cards.
Despite a recent rise in mortgage rates to 6.32 percent this week, economists are optimistic that rates will stabilize in the upcoming months, potentially encouraging more homeowners to list their properties for sale.
Danielle Hale, chief economist at Realtor.com, noted, “Sellers, especially those who are locked into a low rate, have been waiting for market conditions to change. Now that we’re seeing mortgage rates down to their lowest levels in two years, there are signs of movement, with more sellers putting homes on the market, even in what’s typically a real estate shoulder season.”
Hale anticipates that the average rate on a 30-year mortgage will hover around 6 percent through the end of the year. This forecast is significantly lower than the 7.79 percent average rate recorded a year ago, which marked a 23-year high, according to Freddie Mac, a prominent mortgage buyer.
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