The current state of the housing market reveals a worsening shortage of available homes for sale, resulting in limited home sales and sustained price levels. However, there is a strong indication of pent-up demand among buyers, which is expected to be unleashed once mortgage rates decrease and the supply of homes improves.

During the four weeks ending June 4, new listings of homes for sale dropped by 25% compared to the previous year, reaching the lowest level for early June in recorded history.  The persistent lack of new listings has led to a 5% decline in the total number of homes on the market compared to the previous year, reaching the lowest level for early June ever recorded.

The scarcity of homes on the market is primarily due to high mortgage rates, with the daily average reaching 6.94% on June 7, which is close to the highest level in the past two decades. The majority of homeowners have mortgages with rates below 6%, which discourages them from listing their homes and giving up their relatively low rates.

The limited inventory has contributed to relatively modest declines in national home prices. The median price of homes in the United States decreased by 1.6% compared to the previous year, representing the smallest decline in three months and only half the size of the 3.2% drop observed in April, which was the largest decline in at least ten years. However, home prices are still rising in certain parts of the country. The median asking price in the U.S. remains unchanged from a year ago after several weeks of decline, indicating that sellers in some metropolitan areas are recognizing their ability to command favorable prices.  The prices in the Maryland market have not declined compared to other parts of the country.

Leading indicators of homebuying activity are as follows:

  • On June 7, the daily average 30-year fixed mortgage rate stood at 6.94%, down from a seven-month high of 7.14% two weeks earlier, but higher than approximately 6.6% a month earlier. The average 30-year fixed mortgage rate for the week ending June 1 was 6.79%, representing the largest weekly increase since October and the highest rate since November.
  • Seasonally adjusted mortgage-purchase applications decreased by 2% during the week ending June 2 compared to the previous week, and were down by 27% from the previous year.
  • Google searches for "homes for sale" increased by 7% compared to the previous month during the week ending June 3, and remained relatively stable compared to the previous year.
  • According to home tour technology company ShowingTime, touring activity as of June 4 increased by 16% since the beginning of the year, in contrast to a 2% decline observed at the same time last year. Last year, tours declined as mortgage rates soared. Redfin's analysis of the 50 most populous U.S. metros indicates that some metro areas may be excluded at times to ensure data accuracy.

Key highlights of the housing market include:

  • The median home sale price was $379,463, marking a 1.6% decrease compared to the previous year, which is the smallest decline in three months. Over the past six weeks, price declines have been gradually shrinking.
  • The median asking price for newly listed homes remained unchanged at $397,475 compared to the previous year. The monthly mortgage payment for a home at the median asking price reached a new record high of $2,651 with a 6.79% mortgage rate, reflecting a 14% increase ($320) compared to the previous year.
  • Pending home sales declined by 16.6% compared to the previous year, consistent with the declines observed over the past month.
  • Active listings (the number of homes listed for sale at any given time) decreased by 4.6% compared to the previous year, marking only the second decline in 12 months. The first decline occurred a week earlier, when active listings decreased by 1.7%. Active listings also experienced a slight decrease compared to the previous month, while typically, they show month-over-month increases at this time of year.
  • The months of supply, which measures the balance between supply and demand by calculating the number of months it would take for the current inventory to sell at the current sales pace, reached 2.6 months, up from 2.1 months compared to the previous year. A balanced market is typically represented by a supply of four to five months, with a lower number indicating seller's market conditions.