Experts see extended uncertainty ahead
The US housing market remained sluggish through July, weighed down by high borrowing costs, weak demand, and tight supply, with little sign of a turnaround before the fall.
NBC News reported that its Home Buyer Index, which measures the difficulty of purchasing a single-family home, stood at 81.1 in July, indicating extreme challenges for buyers.
Demand has thinned significantly, with the Home Buyer Competition Index dropping to levels not seen since early 2020. Supply remains tight, as the Home Buyer Scarcity Index climbed to 94.2. Data from the Census Bureau also showed a 6% decline in new home completions compared with a year earlier, keeping inventory from easing.
According to Reuters, pending home sales — a leading indicator of signed contracts — slipped 0.4% in July from June. While the figure was up 0.7% compared to the same period last year, the numbers reflect a market that remains stuck in a low-activity phase.
Lawrence Yun, chief economist of the National Association of Realtors, noted that even modest improvements in mortgage rates and inventory are not enough to entice many buyers back into the market.
"Even with modest improvements in mortgage rates, housing affordability, and inventory, buyers still remain hesitant," said Yun.
The Associated Press highlighted that mortgage rates have eased slightly but remain elevated. The average 30-year fixed mortgage rate fell to 6.56% last week, its lowest level in 10 months but still well above the historically low rates seen during the pandemic. The average rate for a 15-year fixed mortgage held steady at 5.69%. Economists expect 30-year rates to hover in the mid-6% range for the remainder of the year.
Meanwhile, MarketWatch reported that home prices are starting to show signs of flattening. The S&P CoreLogic Case-Shiller 20-city index showed a 0.3% dip in June from the previous month but a 2.1% gain compared to last year. Nationally, prices were up 1.9% year over year, the smallest annual increase since the summer of 2023.
Regional variations are also becoming more pronounced. New York posted a 7% annual increase in home prices, while Tampa and San Francisco saw declines of 2.4% and 2%, respectively.
Mark Zandi, chief economist at Moody’s Analytics, noted that stagnant prices, combined with modest inventory growth, are beginning to act as a drag on broader economic momentum.
“National house prices have effectively gone sideways so far this year. This means house prices are falling in about half the nation’s housing markets, mostly in the South and western US,” said Zandi.
Looking ahead, market watchers are focused on the Federal Reserve’s Sept. 17 meeting. NBC News noted that while a potential rate cut could pressure lenders to lower borrowing costs, experts caution that mortgage rates may not fall immediately. This uncertainty could keep both buyers and sellers on the sidelines, prolonging the market’s sluggish performance through the fall months.
