Good news for those looking to buy a home! Mortgage rates have fallen once again, thanks to the Federal Reserve’s decision to hold off on raising interest rates. The average 30-year fixed-rate mortgage rate is now at 6.69%, down from 6.71% the previous week.

But that’s not all. For the first time since 2017, median listing prices have dropped by 0.9% compared to the same time last year. This is a big deal, considering that prices have continually risen for the past six years.

This offers a golden opportunity for homebuyers, especially with the larger number of homes available on the market compared to last year. Realtor.com economist, Jiayi Xu, has analyzed the data and believes that this presents potential opportunities for potential homebuyers.

With lower mortgage rates, lower home prices, and more options than ever, is this the perfect opportunity you’ve been waiting for to finally buy your dream home?

The Mortgage Rates Forecast is Looking Bright

The Fed's decision to pause rate hikes this week has the potential to be a significant turning point, but it doesn't necessarily mean rate hikes are over for good. If inflation persists, we may see another hike or two later this year. However, higher interest rates could create even more instability in the already fragile housing market. The Chief Economist for the National Association of Realtors®, Lawrence Yun, has suggested that the Fed should actually cut interest rates to alleviate some of the pressure. Danielle Hale, the Chief Economist for Realtor.com, predicts that if rates do fall and inflation slows down, we could expect mortgage rates to drop even further - potentially reaching the low 6% range by the end of the year.

What is Behind Some Falling Home Prices Nationally?

Good news for potential homebuyers - home prices are finally starting to drop after a peak last June at $449,000. In May, they came in at $441,000, and there is hope that the trend will continue through this June. Unlike previous drops, this decline is not at the hands of federal institutions, but rather frustrated buyers who refused to put in offers. Homebuyers' hesitations have played a significant role in this decreasing trend, according to Xu.

10% Rise in Inventory Since June 2022 Nationally

Homebuyers looking for a bargain may be struggling to find newly listed homes due to a 22% decrease in the number hitting the market compared to last year. However, there are still plenty of options available for those willing to consider older listings. In fact, active inventory growth is up 10% compared to last year, suggesting that despite a slower pace, the number of homes for sale is still increasing. Sellers, though, are standing firm on high prices, so buyers should be prepared to search diligently for their dream home. According to Xu, the growth in inventory is promising, but there is still work to be done to make buying a home more affordable for everyone.

Some Homes Start to Linger on the Market

Despite slower sales in the past 47 weeks, May housing data indicates that homes are currently spending an average of 43 days on the market, which is faster than the average from 2017 to 2019. However, potential homebuyers are still hesitant to make a move due to uncertainty about the economy. Many are reluctant to commit to high homeownership costs and risk a financial setback. One major obstacle is the near-record high mortgage rates and high listing prices that continue to deter aspiring homeowners.