Mortgage rates tumbled from 6.35% to 6.20% for a 30-year fixed home loan for the week ending Sept. 12, according to Freddie Mac.

“Mortgage rates have fallen more than half a percent over the last six weeks and are at their lowest level since February 2023,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Rates continue to soften due to incoming economic data that is more sedate.”

For the past two weeks, rates lingered at their lowest point in more than a year before this week’s further downturn. Yet despite the rate decline, the U.S. housing market remains sluggish—but perhaps not for long.

“We anticipate the marginal buyer will decide to enter the market in the coming months to take advantage of these favorable conditions,” says Realtor.com® senior economist Ralph McLaughlin in his recent analysis.

However, other buyers ready to make a move might want to make a move sooner.

“Seasonal market dynamics suggest that this year’s Best Time To Buy is Sept. 29 to Oct. 5,” according to Realtor.com senior economic research analyst Hannah Jones.

With those dates quickly approaching, here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest “Weekly Housing Market Update.”

Mortgage rate countdown

After years of soaring mortgage rates, relief could finally arrive soon. Market watchers and economists alike believe the Federal Reserve will finally cut rates at its next policy meeting on Sept. 17–18. Indeed, Chair Jerome Powell himself has indicated that rate cuts are likely.

“Cooling employment and inflation both came in near their anticipated levels, solidifying the Fed’s path toward a rate cut in next week’s meeting,” according to Jones.

While the Fed doesn’t set mortgage rates, the two numbers often move in the same direction—and the anticipated rate cut is expected to give the real estate market a much-needed boost.

Homebuyers have long faced affordability headwinds, but “more favorable housing conditions may be ahead,” says Jones.

Home prices continue to drop

Falling mortgage rates are not the only boon for buyers this fall—homes prices are finally cooling, too.

“With the mortgage rate side of affordability starting to improve, many buyers hope to see prices do the same,” says McLaughlin.

Prices did just that the week ending Sept. 7, with median list prices falling 0.3% year over year. (In August, the national median list price was $429,990.)

Not only has the median list price in the U.S. been less than or equal to what it was in the corresponding week of 2023—price reductions are up as well.

“Sellers are adjusting prices to encourage activity on their listings, with the number of listings with price cuts growing by 33% compared to the same time last year,” says McLaughlin.

The number of homes for sale increases

Adding to the trifecta of good news for homebuyers is rising housing stock.

The total number of houses for sale spiked by an astounding 33.4% for the week ending Sept. 7, compared with the same time last year.

The market also saw an uptick of fresh listings, with 9.9% more homes hitting the market for the week ending Sept. 7. compared with last year.

Just how long has housing stock been rising? This marks a streak of  44 weeks in a row that the number of for-sale homes has increased—catapulting the housing supply to its highest level since May 2020.

However, McLaughlin cautions that “it’s important to note that much of the increase in inventory is due to listings accumulating on a slow market rather than a surge in new listings.” Houses are lingering on the market

Buyers looking for one last sign that now might be the time to jump into the market have one: They have more time to make a decision when making an offer.

Houses spent eight days longer on the market than they did at the same time last year during the week ending Sept. 7. Last month, the typical home spent 53 days on the market, which was the slowest August in five years.

With so many more options available and lower mortgage rates on the horizon, buyers feel less pressure to act quickly.

“Homes are moving significantly slower as buyers take advantage of a more forgiving and flexible market,” says McLaughlin.

Vice President Kamala Harris and former President Donald Trump met on Tuesday night for their first, and possibly only, debate of the 2024 presidential election.

While sparks flew on the stage in Philadelphia, the encounter failed to offer voters a substantive debate on an issue that is key for many families: the rising cost of housing and the challenges of attaining homeownership.

Harris, the Democratic nominee, repeatedly raised the housing crisis, including in the opening seconds of the debate, and sketched out her ideas to boost the construction of new homes and offer federal down payment assistance to first-time buyers. But the Republican Trump failed to respond to those points or offer his own proposals on housing, instead frequently lashing out at the personal taunts and jabs Harris lobbed throughout the debate.

Ralph McLaughlin, senior economist at Realtor.com®, laments that the debate “had the potential to show nuanced differences in their approach to addressing contemporary problems in the U.S. housing market, but fell short on any significant discussion on the matter.

“All in all, this was a disappointing presidential debate with respect to housing policy issues,” he adds. “While we applaud Vice President Harris’ attempts to bring housing into the conversation, presidential debates require two to tango, and former President Trump consistently decided to avoid discussion in the matter, instead directing his attention to more identity politics-related issues.”

For her part, Harris raised housing issues nearly immediately in her first remarks of the debate, when asked whether Americans are better off economically than they were four years ago.

“We know that we have a shortage of homes and housing, and the cost of housing is too expensive for far too many people,” Harris said as part of her response, while failing to directly answer the question on the economy.

Later in the debate, Harris responded to Trump’s extended remarks about crimes committed by immigrants by saying: “It is important that we move forward, that we turn the page on this same old tired rhetoric, and address the needs of the American people, address what we need to do about the housing shortage, which I have a plan for.”

At another point, Harris contrasted her own personal background with that of Trump, the son of a successful New York City real estate developer, to argue that she had a better understanding of the challenges that young first-time homebuyers face in the current market.

“I grew up a middle-class kid raised by a hard-working mother who worked and saved and was able to buy our first home when I was a teenager,” said Harris. “The values I bring to the importance of homeownership, knowing not everybody got handed $400 million on a silver platter and then filed bankruptcy six times, is a value that I bring to my work to say we are going to work with the private-sector and homebuilders to increase 3 million homes, increase by 3 million homes by the end of my first term.”

Harris has proposed tax credits for builders that would incentivize the construction of starter homes sold to first-time buyers. She’s also called for streamlining regulations and cutting red tape to make it easier to build homes, although details of those plans are still unclear.

Later in the debate, Harris mentioned her signature housing policy, an ambitious plan to provide federal subsidies to first-time homebuyers.

“I have a plan that is about allowing people to be able to pursue what has been fleeting in terms of the American dream by offering help with down payment of $25,000, down payment assistance for first-time homebuyers,” she said. “That’s the kind of conversation I believe, David, that people really want tonight as opposed to a conversation that is constantly about belittling and name-calling.”

Finally, Harris also touched on the rising cost of property insurance, an issue that is affecting many homeowners. Nationally, home insurance rates jumped 34% from 2018 through 2023, according to S&P Global Market Intelligence. Experts say that huge insurance payouts from climate-related disasters have been a key driver of rising premiums.

“The former president had said that climate change is a hoax, and what we know is that it is very real,” Harris said in a portion of the debate on climate change. “You ask anyone who lives in a state who has experienced these extreme weather occurrences, who now is either being denied home insurance or is being jacked up. You ask anybody who has been the victim of what that means in terms of losing their home, having nowhere to go.”

During the 90-minute debate, Trump did not respond to Harris’ policy points on housing a single time—and did not utter the words “rent,” “homes,” or “housing.” The Republican nominee has previously said that he would lower housing costs by halting illegal immigration, cutting regulations on homebuilders, and opening up some federal land for new construction.

McLaughlin notes that both candidates have focused on ways to increase the supply of housing, saying that Trump’s avoidance of the issue could be “a reflection of just how similar Trump’s supply-side housing policies would be.

“While their broader approaches are more similar than they are different, with each proposing much welcomed supply-side proposals, the nuanced differences were essentially ignored during the debate,” adds McLaughlin. “While details of former President Donald Trump’s policies haven’t been as specific, his campaign has focused on more second-order approaches of helping homebuyers, such as inflation reduction, lowering aggregate housing demand via immigration controls, and opening up vast swaths of federally owned land for housing development. There was zero debate of these important issues in tonight’s debate, and only a casual mention by Harris of her housing plans.”

The debate comes after Harris added a policy section to her campaign website last week, outlining her proposals on key issues, including housing.

Notably, the section on housing policy includes no mention of President Joe Biden‘s proposal to cap rent increases for certain apartment buildings at 5% annually, which Biden suggested shortly before dropping out of the race. Harris hasn’t yet firmly endorsed or disavowed the national rent control proposal, which drew polarized reactions and would require congressional approval to move forward.

Instead, the campaign website outlines in broad strokes the housing policies that Harris has already floated, without adding much in the way of new details. Those policies include a plan to build 3 million more housing units over a first term, and a vow to “cut red tape to make sure we build more housing faster.”

The website also reiterates her support for a federal law that would penalize large investment firms that buy many single-family homes to rent out, and her proposal to assist first-time homebuyers with a down payment.

“As more new homes are built and affordable housing supply increases, Vice President Harris will provide first-time homebuyers with up to $25,000 to help with their down payments, with more generous support for first-generation homeowners,” the website reads, without offering new details about who would qualify or how the assistance would be paid out.

Consumer prices rose by 0.2% in August on a seasonally adjusted basis and were up 2.5% year over year, according to the latest consumer price index report released on Wednesday.

That’s the lowest increase since March 2021 and is down from July (2.9%), June (3.0%), May (3.3%), and April and March (3.4%) readings.

The CPI is generally a good indication of consumer purchasing power. As inflation increases, so does the CPI, which can influence the Federal Reserve, which next meets on Sept. 18, to decide on whether to make interest rate cuts.

The CPI is “one of the last major data checkpoints on the road to the Fed’s meeting and decision in September,” says Realtor.com Chief Economist Danielle Hale. “It will hold vital clues about the likely size of the Fed’s cut in September, which is widely believed to be a given at this point. Coming just a week before the Fed meeting concludes, CPI inflation is also likely to be one of the last major inputs in the forecasts that Federal Open Market Committee members will share during the September meeting.”

A recent Reuters poll of economists found that despite a relatively soft jobs market, most expect a reduction of 25 basis points, or .25%, though some early bets were on a 50 basis points (.5%) decrease.

How the consumer price index affects housing costs

The CPI has a knock-on effect on the cost of building materials, labor, and maintenance, directly influencing the cost of new-home construction and the renovation and maintenance of existing properties. Homeowners putting off necessary property maintenance or updates because of rising costs might sacrifice property values down the road.

Housing purchases have significantly slowed as buyers have put purchases on hold in anticipation of lower interest rates. Meanwhile, the number of homes for sale has increased year over year by more than 35%. The total number of unsold homes increased by 20.9% from August 2023, and many sellers—around 19.3%—have resorted to price slashes to compete.

But while home prices have decreased 1.3% since last year, the price per square foot grew by 2.3% year over year.

With 30-year interest rates hovering around 6.942%, the Fed’s anticipated rate cut might offer some reprieve for the market.

“The market will anticipate the Fed’s reaction, and we’re likely to see lower mortgage rates even before the Fed moves,” says Hale. “This mortgage rate relief is coming a bit too late in the year to salvage the 2024 homebuying season, but flexible buyers could be poised to benefit.”

“The fall market is the best time to buy for homebuyers who can take advantage of generally lower competition and prices, and will have the added boost of extra purchasing power this year as mortgage rates fall,” says Hale. “While lower mortgage rates could help draw in some additional buyers, ample inventory should help to absorb the boost in demand, and the usual seasonal slowdown is likely to keep a top on competitiveness.”

Homebuyers looking to get ahead of a possible influx of competition in the market should take advantage of strategies to lower mortgage rates that don’t depend on the Fed or inflation, advises Hale.

Buyers can work on improving their credit score, dropping debt or growing income to improve their debt-to-income ratio, and consider making a larger down payment. No matter what, Hale recommends that buyers always shop around among lenders to get the best deal.

A man who dubbed himself the “Wolf of West Virginia” has been accused of running a real estate investment scam with his mother’s assistance, after using TikTok to show off his lavish lifestyle and advertise investment schemes.

Theodore “Teddy” Miller, 34, was charged with 12 counts of wire fraud, one count of money laundering, and two counts of obstruction in an indictment returned last week by a federal grand jury in Charleston, WV.

In a parallel civil case filed on Wednesday, the Securities and Exchange Commission alleged that Miller’s mother, Deanna Drumm, provided administrative support for his schemes and received more than $170,000 in investor funds. Drumm is not charged in the criminal complaint, which identifies her only by her initials.

Prosecutors say that while Miller held himself out to investors as a wealthy real estate mogul who could deliver guaranteed returns, he in fact had poor credit, little money in the bank, and a record of tax delinquency and loan defaults.

On Instagram, Miller showed off his jet-setting lifestyle, including lavish trips to France, India, Thailand, Peru, and elsewhere. His personal website asked potential investors: “Are you ready to start making some f—ing money, and stop being a p—y?”

How Teddy Miller scammed his victims

According to charging documents, Miller’s company Bear Industries LLC solicited “direct investments” in specific real estate projects in Charleston, including a proposal to develop duplex housing and another to convert a residential property into a dry storage facility.

In an affidavit, FBI agent Aaron M. Lee described how one investor saw Miller touting one of the plans on TikTok, and reached out to learn more. Miller responded with a promotional investor packet, saying the project was a “great way to make a hell of a return.” The alleged victim sent him $20,000 to invest, according to Lee.

Miller persuaded investors in California, Florida, and Texas to wire him funds totaling $90,000 for the direct investment projects, according to the charging documents. But prosecutors say Miller never even owned the properties in question and did not pursue the projects, instead pocketing the money and cutting off contact with the investors.

In a separate alleged scheme, Miller launched a pooled real estate investment fund called Bear Lute, which he advertised on social media as a way for ordinary people to become wealthy and enjoy the same exorbitant lifestyle as himself.

In obscenity-laced videos on TikTok, Miller promised investors in the fund guaranteed minimum returns of 6%, and a historical average return of 20%, while claiming all investments in the fund were secured by income-producing real estate.

“My company pays some pretty good f—ing profits to its investors,” Miller said in one of the videos. “You can get started with as little as a hundred f—ing bucks, see what f—ing happens, all the way up to a million f—ing dollars, as long as you remember that golden rule, that you can’t make money if you’re a f—ing p—y.”

More than 100 people invested a total of more than $200,000 in the Bear Lute fund, according to the indictment.

“Nearly all of Miller’s representations and promises about Bear Lute were untrue, including that he owned the property pledged as security for investors,” the U.S. Attorney’s Office for the Southern District of West Virginia said in a statement. “Miller posted false figures on an online investor dashboard that purported to allow investors to track and manage their investments, and ceased all communications with investors who requested withdrawals.”

Prosecutors say that Miller diverted the investor funds for personal and business expenses for the benefit of himself and his mother, Drumm, who held herself out as the vice president of Bear Industries LLC and acted as Miller’s agent while he was outside of the U.S.

Miller previously gained local notoriety in Charleston in 2020 with a series of social media posts proclaiming himself the “Wolf of West Virginia” and touting plans for a new bar with female servers dressed in “school girl uniforms.”

He allegedly returned to the U.S. on Aug. 8 after spending more than two years out of the country. Lee, the FBI agent, filed his complaint under seal on Aug. 9, and Miller was arrested on the same day.

If convicted of all charges, Miller faces up to 200 years in federal prison. Court records show he is being held without bail and is next due to appear in court on Thursday.

In SEC’s civil complaint, Drumm is named as a relief defendant, meaning the agency believes she is in possession of ill-gotten funds. The SEC is seeking disgorgement of those funds and civil penalties for Miller, including a lifetime ban from the offer or sale of securities.

Miller’s court-appointed public defenders did not immediately respond to a request for comment on Monday. Drumm could not be reached for comment.

Former President Donald Trump said he would ban undocumented immigrants from obtaining home mortgages, a move he indicated would help ease home prices even though these buyers account for a tiny fraction of U.S. home sales.

Home loans to undocumented people living in the U.S. are legal but they aren’t especially common. Between 5,000 and 6,000 mortgages of this kind were issued last year, according to estimates from researchers at the Urban Institute in Washington.

Overall, lenders issued more than 3.4 million mortgages to all home purchasers in 2023, federal government data show.

Trump, the Republican presidential nominee, made his comments on Thursday during a policy speech to the Economic Club of New York in Manhattan.

Housing remains a top economic issue for voters during this presidential election. Rent and home prices grew at historic rates during the pandemic and mortgage rates climbed to levels not seen in more than two decades. A July Wall Street Journal poll showed that voters rank housing as their second-biggest inflation concern after groceries.

Both major candidates for the 2024 presidential election have made appeals to voters on housing during recent campaign stops, though the issue has so far featured more prominently in Vice President Kamala Harris’s campaign.

Some affordable-housing advocates and real estate professionals said Trump’s mortgage proposal would fail to bring relief to priced-out home buyers. “It’s unfortunate that given the significant housing affordability crisis that is widely acknowledged across most partisan lines, we are arguing about a minuscule segment of the market,” said David Dworkin, president of the National Housing Conference, an affordable-housing advocacy group.

Gary Acosta, chief executive of the National Association of Hispanic Real Estate Professionals, a trade organization, said that “it’s just another effort to vilify immigrants and to continue to scapegoat them for any issues that we have here in the United States.”

A Trump campaign spokeswoman didn’t immediately respond to a request for comment.

Undocumented immigrants in the U.S. can obtain an obscure type of mortgage designed for taxpayers without Social Security numbers, most of whom are Hispanic. The passage of the USA Patriot Act of 2001 allowed banks to use identification numbers from the Internal Revenue Service as an alternative to Social Security, extending a number of financial services to people without legal status for the first time. Mortgage loans for undocumented immigrants are typically higher interest and borrowers include legal residents who have undocumented spouses, Acosta said. Lenders include regional credit unions and community-development financial institutions.

In his speech, Trump said that “the flood” of undocumented immigrants is driving up housing costs. “That’s why my plan will ban mortgages for illegal aliens,” he said.

Trump didn’t elaborate on how he would enact a ban on such loans.

Though mortgages for undocumented people living in the U.S. are relatively rare, residential real-estate purchases by foreign nationals are big business, especially in expensive coastal cities such as New York and Los Angeles. These sales have declined in recent years, however. Close to half of foreign purchases are made by people residing abroad, while the other half are made by recent immigrants or residents on nonimmigrant visas, according to an annual survey by the National Association of Realtors. Many affluent foreigners buy U.S. homes with cash instead of obtaining mortgage financing.

In his Thursday speech, which focused mostly on other economic matters such as energy and taxation, Trump proposed other measures to bring down housing costs, including cutting regulations for builders and allowing more building on federal land. Similar ideas appeared in the housing policy outline Harris released in August.

The former president has spoken on housing-related issues in speeches at other recent campaign stops, including in Michigan last month, where he touted his administration’s 2020 overturn of a policy that had encouraged cities to reduce racial segregation.

“I keep the suburbs safe,” Trump said. “I stopped low-income towers from rising right alongside of their house. And I’m keeping the illegal aliens away from the suburbs.”

Mortgage rates stayed flat at 6.35% for a 30-year fixed home loan for the week ending Sept. 5, according to Freddie Mac.

“Mortgage rates remained flat this week as markets await the release of the highly anticipated August jobs report,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Even though rates have come down over the summer, home sales have been lackluster. On the refinance side, however, homeowners who bought in recent years are taking advantage of declining mortgage rates in order to lower their monthly payments.”

With mortgage rates expected to decline even further, more buyers are expected to enter the market in the coming months, according to Realtor.com® economist Jiayi Xu in her recent analysis.

This should breathe life into the sluggish summer housing market, which will give “buyers more options as the autumn approaches,” says Realtor.com senior economist Joel Berner.

As we look ahead toward fall, here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in the latest installment of our “Weekly Housing Market Update.”

Mortgage rate news

In the first days of September, the yield on 10-year Treasuries slipped below 3.9% “amid expectations of rate cuts coming out of upcoming Federal Reserve meetings,” Berner says.

The next meeting is less than two weeks away, on Sept. 17–18.

The central bank is likely to respond to the recent slowdown in inflation and uptick in unemployment by lowering interest rates, according to Berner, and this development allows for some much anticipated easing of mortgage rates. (While the Fed doesn’t set mortgage rates, Fed rates and mortgage rates tend to move in the same direction.)

Despite a bumpy start, the 2024 summer housing market is wrapping up “by shifting to a more buyer-friendly environment,” says Xu.

Home prices continue to drop

Median list prices fell 0.9% year over year for the week ending Aug. 31. (In August, the national median list price was $429,990.)

For the 14th week in a row, the median list price in the U.S. was less than or equal to what it was in the corresponding week of 2023.

“The share of listings with price reductions reached the highest for an August in over five years as sellers adjust asking prices to better meet what buyers are looking for,” Xu says.

The number of homes for sale rises

The total number of houses for sale shot up by 34.6% for the week ending Aug. 31, marking a 43-week streak of increasing for-sale homes compared with the same time last year.

Meanwhile, fresh listings new to the market spiked by 5.5% for the week ending Aug. 31 year over year.

Mortgage rates are anticipated to decline through the rest of the year, which could motivate more hesitant homeowners to sell, says Xu.

“However, we don’t foresee a significant increase in selling activity until next spring,” says Xu, “when rates are likely to be even lower, and the typical seasonal rise in inventory occurs.”

The pace of the market slows down

Homes spent six days more on the market for the week ending Aug. 31 compared with the same time in 2023.

The typical home spent 53 days on the market in August, which was the slowest August in five years.

“Homes continue to take longer to sell than one year ago,” says Xu. “With more options available and lower mortgage rates on the horizon, buyers feel less pressure to act quickly.”

Late real estate mogul Brandon Miller died with just $8,000 in the bank after racking up $34 million in debt, it has been reported.

Weeks after Miller took his own life at the age of 43, legal documents have now revealed the true extent of his financial struggles—much of which was linked to the expansive $15.5 million Hamptons mansion he shared with his influencer wife, Candice.

Candice, who rose to online fame with the success of her now-defunct blog “Mama + Tata,” put the Water Mill, NY, property up for sale in mid-August.

The 8,674-square-foot home is where Miller was found unresponsive inside his Porsche Carrera on June 30, while his wife and children were on vacation on Italy’s Amalfi Coast.

Details have begun to emerge about the staggering debts that the real estate developer had amassed, all while maintaining a carefully manicured illusion of wealth and privilege, much of which was showcased on his wife’s social media accounts.

The bitter truth behind that mirage has now been laid bare, with The RealDeal reporting that Miller had four outstanding loans on his Hamptons home, according to a bond petition that was recently filed by his wife.

Those include a $2 million mortgage from Titan Capital, as well as an $800,000 loan from the same firm, which recently launched a lawsuit against Candice over missed payments. Miller also had outstanding loans with UBS and Stevens Financial Group at the time of his death.

On top of the debt that was linked to the couple’s Hamptons property, Miller had also taken out an $11.3 million loan from BMO Bank, according to The RealDeal, as well as a $6.1 million loan from financier Donald Jaffe, who previously sued the real estate mogul in 2021 over missed payments.

He also owed $300,000 to American Express and $266,000 to a Brooklyn-based company called Funding Club.

In total, Miller had amassed around $33.6 million in personal loans that were still outstanding when he died on July 3, as well as several business loans that were taken out on behalf of his company, Real Estate Equities Corp.

According to the New York Times, Miller left behind a suicide note indicating that he had intended to take his own life, with many suggesting that his extraordinary debts had taken an insurmountable toll on him.

Miller had reportedly assured his wife that the situation was in hand when she jetted off to Europe with their children, but days later made the suicide attempt that ultimately resulted in his death.

Shortly after Candice listed the couple’s Hamptons home, Page Six reported that she intended to relocate to Miami with her kids, with a source saying that she was “over New York.”

Prior to Miller’s tragic suicide, the couple had reportedly been living in a $47,000-a-month rented apartment on Manhattan’s Upper East Side, having sold their Tribeca apartment for $9 million in 2021, according to the Times.

The couple’s Hamptons home is still listed as being on the market with an asking price of $15,495,000. Miller first bought the property in 2011 for $3.2 million and developed it under the entity Cobb Isle Cottage LLC before transferring it to his own name in 2013.

Mortgage rates continued to fall this week, with the average rate for a 30-year fixed home loan going from 6.46% last week to 6.35% for the week ending Aug. 29, according to Freddie Mac.

“Mortgage rates fell again this week due to expectations of a Fed rate cut,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Rates are expected to continue their decline and while potential homebuyers are watching closely, a rebound in purchase activity remains elusive until we see further declines.”

The summer housing market has been lackluster up to now, according to Realtor.com® senior economic research analyst Hannah Jones in a recent analysis. However, things might soon turn around.

“Falling mortgage rates have infused some much needed energy in the market,” says Jones. “Buyers may be eager to take advantage of the lowest mortgage rates in over a year and secure a home before the fall.”

Will the market find its way out of its summer slump? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in the latest installment of our “Weekly Housing Market Update.”

Mortgage rate news

The Federal Reserve’s September policy meeting is quickly approaching—as is the promise of a rate cut for the first time in more than a year.

“The time has come for policy to adjust,” said Federal Reserve Chair Jerome Powell last Friday.

While the Fed doesn’t set mortgage rates, the two numbers often move in the same direction—and a rate cut next month is now “all but guaranteed,” according to Realtor.com senior economist Ralph McLaughlin.

Yet this doesn’t mean that rates will take a significant nosedive.

“We shouldn’t expect much downward movement in mortgage rates unless worse-than-expected economic indicators suggest the market is headed for anything but a soft landing,” says McLaughlin.

In a recent Realtor.com midyear housing forecast update, our year-end mortgage rate expectations were revised to 6.3%.

While homebuyers may be somewhat disappointed that rates might not fall much further in 2024, borrowers can lower their mortgage rate by up to 150 basis points “simply by shopping around, improving their credit score, increasing their down payment, and paying off existing debt,” says McLaughlin.

Basis points are a way to measure small changes in rates. For example, if mortgage rates drop by 25 basis points, they decrease by 0.25%.

Home prices continue to fall

Median home prices are down 0.2% for the week ending Aug. 24 compared with the same time last year.

This marks 13 weeks in a row where the median list price in the U.S. was less than or equal to what it was a year ago. (In July 2024, the national median list price was $439,950.)

Indeed, buyers and sellers have seen a consistent moderation in prices since the beginning of June, with some buyers benefiting from sellers slashing list prices.

“Year to date, the share of listings with price reductions has been more in line with pre-pandemic levels than the past several years as sellers adjust asking prices to better meet what buyers are looking for,” says Jones.

Housing stock is up

The total number of houses for sale increased by 33.6% for the week ending Aug. 24 compared to last year, marking a whopping 42-week growth streak.

Indeed, this bump in homes for sale translates into the largest number of active listings on the market since May 2020.

“Homes are no longer flying off the shelves like they did during the pandemic as buyers struggle to find what they are looking for at a price they can afford,” says Jones.

Meanwhile, fresh listings ticked up just 2.2% for the week ending Aug. 24 year over year.

Despite rates finally starting to go in the right direction, “lackluster buyer demand and still-high mortgage rates mean many homeowners have been rather reluctant to sell of late,” says Jones. “We expect mortgage rates to continue to ease through the rest of the year, which could help to ‘unlock’ seller activity.”

The market’s pace decelerated

Buyers finally have some breathing room when it comes to making an offer on a home.

For the week ending Aug. 24, homes spent eight more days on the market than the same time a year prior, marking the most significant annual increase in time on the market since July 2023.

“Time on market slowed to February’s level this week, emphasizing this summer’s moseying pace,” says Jones. (The typical home spent a whopping 50 days on the market in July.)

That means sellers will likely continue to adjust prices to see some movement in their listings, which is great news for homebuyers who have long waited for the market to change.

The uptick in time on the market creates “more time and space for buyers to get their ducks in a row,” says Jones.

The numbers: Pending home sales hit a fresh record low in July as declining mortgage rates failed to spark increased activity, in part because of the uncertainty over the election.

Pending home sales fell 5.5% in July from the previous month, according to the monthly index released Thursday by the National Association of Realtors (NAR). That pushed the index down to an all-time low. The index had hit an all-time low in May but bounced back in June.

The drop in the index in July was unexpected. Economists were forecasting pending home sales to rise 0.1%, according to a survey by the Wall Street Journal.

Contract signings fell to a record low, the NAR said, since it began tracking sales data since 2001.

Year-over-year, transactions were down 8.5%.

Key details: Pending home sales sank in all four regions of the country. The New England region has performed better than other regions in the past few months.

Big picture: U.S. mortgage rates are now at their lowest level in 16 months, fueling some optimism in the battered housing sector.

What the NAR said: “A sales recovery did not occur in midsummer,” said NAR Chief Economist Lawrence Yun. “The positive impact of job growth and higher inventory could not overcome affordability challenges and some degree of wait-and-see related to the upcoming U.S. presidential election.” He added that falling mortgage rates should bring buyers into the market in coming months.

Looking ahead: “Lower mortgage rates are incrementally supporting demand, but rates are still too high to support new listings of homes for sale, thus applying a damper on market turnover,” said Shelly Kaushik, economist at BMO Capital Markets, in a note.

Market reaction: Stocks opened higher on Thursday while the 10-year Treasury yield rose in early morning trading.

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The U.S. Treasury Department has issued a new rule that aims to prevent nefarious actors from using residential real estate deals for money laundering.

The final rule issued on Wednesday will require real estate professionals to report the true identity of all-cash homebuyers who use shell companies or other legal entities to purchase residential property in the U.S. While those buyers can remain publicly anonymous, the rule requires the disclosure of their identity to the Financial Crimes Enforcement Network.

The purpose of the new rule is to prevent illicit actors such as drug cartels, international criminals, or sanctioned foreign oligarchs from laundering money through the housing market using anonymous transactions. Similar reporting rules already apply to banks and other mortgage lenders.

“The Treasury Department has been hard at work to disrupt attempts to use the United States to hide and launder ill-gotten gains,” said Treasury Secretary Janet L. Yellen in a statement. The new requirements will “close critical loopholes in the U.S. financial system that bad actors use to facilitate serious crimes like corruption, narcotrafficking, and fraud.”

A separate final rule that the Treasury Department also issued on Wednesday adds certain investment advisers to the list of financial professionals who are required to notify FinCEN about suspicious transactions.

The new reporting rule for all-cash real estate deals will take effect on Dec. 1, 2025, while the new rule for investment advisers kicks in on Jan. 1, 2026.

“These steps will make it harder for criminals to exploit our strong residential real estate and investment adviser sectors,” said Yellen.

All-cash real estate deals are on the rise

A growing share of residential real estate deals in the U.S. is being conducted in cash, although there is likely nothing nefarious or illegal about the vast majority of them.

In January, 32% of home sales were conducted in cash, the highest share in nearly a decade, according to the National Association of Realtors®.

Amid higher mortgage rates, many homebuyers with the means to do so have turned to cash deals to avoid paying punishing interest on home loans.

Migration patterns after the COVID-19 pandemic also likely spurred more cash sales: Families moving away from higher-priced states such as California and New York often netted such high profits from the sale of their old house that they were able to buy a new house in a lower-priced area outright.

Realtor.com® Chief Economist Danielle Hale says that record-high equity levels have enabled the surge in cash deals, especially for buyers who are downsizing to a smaller home or lower-cost market.

“Another reason all-cash deals are more common is that investors are purchasing a record high share of real estate,” she says. Investors, who are nearly twice as likely as other homebuyers to use cash, are buying fewer homes than they did a few years ago, but account for a higher share of all real estate deals as total transactions have slumped to historic lows.

The purpose of the new Treasury reporting rule isn’t to discourage or penalize cash deals for homes, but rather to bring transparency by requiring disclosure of the buyer’s true identity.

That’s because cash real estate deals have long been known as a potential vehicle for money launderers or other illicit actors. Criminals or foreign entities otherwise barred from the U.S. financial system have been known to use illicit funds to purchase homes, and use them to generate seemingly legitimate funds through rental income or flipping.

Other schemes involve the purchase of lavish homes in the U.S. as a form of bribery, with the true source of funds and beneficial owner cloaked in secrecy.

In one recent case, the Justice Department seized a mansion in the upscale Holmby Hills section of Los Angeles that prosecutors say was purchased for the family of a former Armenian government minister as a bribe.

The 11-bedroom chateau-style mansion was purchased in 2011 for $14.4 million by a trust benefiting the sons of Gagik Khachatryan.

The sons claimed the purchase was financed by loans from an Armenian businessman. Prosecutors say the loans, repeatedly extended without repayment, were a concealed bribe to Khachatryan, who was at the time in charge of taxes and customs in Armenia.

Last month, the DOJ finalized a civil forfeiture settlement that gives the U.S. possession of the mansion. The property is currently listed for $39.7 million.

How the new rule will work

Under the new rule, one of the real estate professionals involved in an all-cash home sale to a shell company or trust will have to file a report with FinCEN naming the beneficial owner behind the legal entity buying the home.

The closing agent, an independent third party who facilitates many closings, is the primary person tasked with making the report. If there is no closing agent, the reporting duty falls to a “cascading” list of professionals involved in the title transfer process, but only one report needs to be filed for each transaction.

Those reports must contain certain information about the buyer, the seller, the property in question, and the total amount of the sale. FinCEN does not require the reports for certain common, low-risk title transfers, such as those that stem from death, divorce, bankruptcy, or transfer into a trust for estate planning.

A similar rule has applied since 2016 to cash deals above a certain threshold in Miami and Manhattan, which are popular markets for wealthy foreign buyers. Several other major cities have also been added under so-called geographic targeting orders since then.

The new regulation applies to transactions nationwide. The Treasury Department, after receiving feedback from the real estate industry, somewhat relaxed its final rule, allowing the reporting person to reasonably rely on information about the buyer provided by other parties, so long as they aren’t privy to facts that call that information into question.

The American Land Title Association, an industry group representing title insurers, said that it was still reviewing the new rule, but that “it appears the agency incorporated several important industry recommendations to streamline the regulation and reduce some of the burden on real estate professionals.”

However, the group added that the new regulation could increase costs for the businesses involved in real estate transactions by up to a half-billion dollars annually.

“We share the goal of protecting the U.S. real estate market from money laundering and intend to work collaboratively with FinCEN, as we have effectively for the past eight years, to reduce the cost of this regulation and impact on our small businesses—estimated at more than $500 million annually—while providing law enforcement with the information necessary to do their jobs,” said ALTA in a statement to Realtor.com.

Home prices in the U.S. have reached a new record high but are growing at a slower pace, in a sign the market is starting to turn.

Released on Tuesday, the latest S&P CoreLogic Case-Shiller Index of national home prices hit an all-time high in June, growing 5.4% from one year ago. That was down from a 5.9% annual gain reported the previous month.

“This is the lowest rate of home price appreciation since November 2023, but it is still remarkable given the fact that home prices are at record highs and, in June, mortgage rates were still around 7%,” says Bright MLS chief economist Lisa Sturtevant. “The upward pressure on home prices is making this the most unaffordable housing market in history. First-time and moderate-income home buyers, in particular, increasingly are being left out of the housing market.”

Case-Schiller’s composite indices of home prices in the 10- and 20-largest U.S. cities also hit record highs for June, which is typically the seasonal peak of the year. The 10-city index grew 7.4% on the year, decelerating from a 7.8% gain the prior month. The 20-city index increased 6.5% from a year ago, down from 6.9% in May.

“We expect the rate of home price growth to slow somewhat further,” says Realtor.com® chief economist Danielle Hale. “Even though the number of homes on the market for sale trails 2017 to 2019 levels by 30%, the number of home sales has remained quite low.”

The Realtor.com economic research team projects home price growth of just 4.6% for the whole of 2024, suggesting price growth will continue to decelerate.

In June, New York reported the highest annual gain among the 20 largest cities, with prices rising 9%. Following were San Diego with 8.7% annual price growth and Las Vegas with an increase of 8.5%.

Home prices in Portland, OR, continued to grow at the slowest pace, rising just 0.8% in June from a year ago.

Home prices take center state ahead of election

The Case-Schiller index is considered a leading tracker of home prices, though it is reported with significant delays. Previously, the National Association of Realtors reported that median prices for existing homes hit an all-time high of $426,900 in June, before easing back to $422,600 in July, following seasonal trends.

Prices for newly constructed homes remain near all-time highs after peaking in 2022. The median sales price for new homes was $429,800 in July, according to Census data.

The new record high for national home prices comes as housing affordability plays a major role in the upcoming presidential election.

Vice President Kamala Harris, the Democratic nominee, recently proposed a slate of housing policies, including $25,000 in down-payment assistance for first-time homebuyers. Republican nominee Donald Trump called the plan "a big mistake," saying it would only raise home prices, yet suggested he "might" also consider some form of homebuyer assistance if elected.

“Home prices and inflation continue to factor into the political agenda coming into the election season," says Brian D. Luke, head of commodities, real and digital assets at S&P Dow Jones Indices. "While both housing and inflation have slowed, the gap between the two is larger than historical norms."

Luke notes that the Case-Schiller housing price index has recently outpaced overall inflation by 2.8 percentage points, which is one full point higher than the 50-year average.

"Before accounting for inflation, home prices have risen over 1,100% since 1974, but have slightly more than doubled (111%) after accounting for inflation," he says.

The new data also shows that home prices are growing the fastest for entry-level homes in the lowest of three price tiers, which range based on local prices.

"Looking at the last five years, 75% of the markets covered show low-price tiers rising faster than the overall market,” says Luke. “For example, the lower tier of the Atlanta market has risen 18% faster than the middle- and higher-tiered homes."

At last, “the time has come” for interest rate cuts.

Earlier on Friday, Federal Reserve Chair Jerome Powell gave would-be homebuyers and sellers some much needed hope.

At the central bank’s annual gathering in the Grand Teton National Park in Jackson Hole, WY, Powell said, “We do not seek or welcome further cooling in labor market conditions. The time has come for policy to adjust.”

Just last month, Powell had indicated an interest rate cut from its current 23-year high “could be on the table.”

“From ‘on the table’ at July’s meeting to ‘the time has come,’ in today’s Jackson Hole Symposium address, Chair Powell also stated that ‘my confidence has grown that inflation is on a sustainable path back to 2%,'” says Realtor.com® Chief Economist Danielle Hale. “These are clear indications that a Fed rate cut is ahead.”

What’s expected to happen in September

The Fed’s next policy meeting is scheduled for Sept. 17–18, and the question on everybody’s mind now is just how big this anticipated rate cut could be.

“My expectation, and that of the many investors now, is that the Fed will make a 25 basis point cut in September, and that this is likely the first of several that will be appropriate in late 2024,” Hale explains. “There is a chance that the September cut could be as large as 50 basis points.”

That will depend on the inflation and labor market readings due out between now and the Sept. 18 decision, according to Hale, who says the Fed will remain data-dependent.

“Chair Powell noted that the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks,” she explains.

The likely impact on the real estate market

The Fed’s actions in the next few weeks and months are expected to have a major impact on mortgage rates—and America’s real estate market.

“Because these cuts are widely anticipated, they have already helped mortgage rates drop into the mid-6% range, and we could see some additional easing in the months ahead,” Hale says. “In fact, the Realtor.com 2024 Housing Forecast Update now anticipates that the typical 30-year fixed rate mortgage will be in the low 6% range by the end of the year.”

Mortgage rates fell this week, with the average rate for a 30-year fixed home loan going from 6.49% last week to 6.46% for the week ending Aug. 22, according to Freddie Mac.

“Although mortgage rates have stayed relatively flat over the past couple of weeks, softer incoming economic data suggest rates will gently slope downward through the end of the year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Earlier this month, rates plunged and are now lingering just under 6.5 percent, which has not been enough to motivate potential homebuyers. We expect rates likely will need to decline another percentage point to generate buyer demand.”

As a result, “things are shaping up for a buyer-friendly end of summer,” according to Realtor.com® senior economist Joel Berner in his recent analysis.

Will the housing market continue to heat up as temperatures cool down this fall? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in the latest installment of our “Weekly Housing Market Update.”

Where mortgage rates might be headed

There was very little change this week in Freddie Mac’s 30-year mortgage rate, as the financial market holds its breath awaiting Friday’s speech by Federal Reserve Chair Jerome Powell.

Investors and economists hope Powell will provide important clues about the central bank’s next steps on where interest rates are heading.

Last month, inflation dropped below 3% in July for the first time since 2021, “fueling widespread expectations that the Federal Reserve will initiate its first interest rate cuts in September,” says Realtor.com economist Jiayi Xu. (While the Fed doesn’t set mortgage rates, Fed rates and mortgage rates tend to move in the same direction.)

However, unemployment rose to 4.3% in July, sparking concerns about a potential recession.

Thus, policymakers will time rate cuts carefully, “seeking to curb inflation without triggering a sharp increase in unemployment,” says Xu.

Home prices continue to fall

Not only are interest rates dropping, home prices are, too.

Median list prices fell 1.2% year over year for the week ending Aug. 17.

This marks 12 weeks in a row where the median list price in the U.S. was less than or equal to what it was a year ago. (In July 2024, the national median list price was $439,950.)

Indeed, buyers and sellers have seen a consistent overall moderation in prices this summer.

Since January, the share of listings with price reductions has been more in line with pre-pandemic levels as the pace of sales has moderated, “bringing more listings in line with buyers’ budgets,” says Berner. 

The number of homes for sale shot up

For the week ending Aug. 17, the total number of houses for sale increased by 34.8% compared with the same time last year, marking a 41-week streak of growth.

With considerably more homes on the market than there were at this time in 2023, “sellers are starting to be relieved of the mortgage rate lock-in effect that has constrained the supply of listings over the past year,” says Berner.

In the meantime, fresh listings new to the market dipped by 0.2% for the week ending Aug. 17 year over year.

Despite mortgage rates falling in early August, new listings are “struggling to rebound as negative sentiment around selling a home persists,” says Berner. “Potential buyers are just starting to see the recovery in the number of options available to them post-pandemic.”

Sales of previously owned homes increased slightly last month, but remained near historic lows as many homebuyers waited on the sidelines for mortgage rates to fall further.

Total existing-home sales ticked up 1.3% from June, to a seasonally adjusted annual rate of 3.95 million in July, the National Association of Realtors® reported on Thursday. The July sales figure, which excludes new construction, represented a 2.5% decline from one year ago and was the slowest July sales pace since 2010.

The median sales price for existing homes was $422,600 in July, up 4.2% from one year ago and the highest price on record for the month of July. Prices rose in all four U.S. regions on an annual basis.

“Despite the modest gain, home sales are still sluggish,” says NAR Chief Economist Lawrence Yun. “But consumers are definitely seeing more choices, and affordability is improving due to lower interest rates.”

According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.85% for the month of July. That was down from 6.92% in June. Rates have since dropped further ahead of a widely expected cut to the Federal Reserve’s benchmark rate next month, and the Realtor.com® economics team expects mortgage rates to hit 6.3% by the end of the year.

“Mortgage rates have moved in a buyer-friendly direction after playing the foe for much of the peak homebuying season,” says Realtor.com Chief Economist Danielle Hale. “Easing inflation helped accelerate the decline in mortgage rates in mid-July, and rates currently hover near 15-month lows. This is likely to bode well for buyers in the fall—a typically advantageous season for home shoppers.”

A limited supply of homes for sale keeps prices high

The median sales price of existing homes in July dropped slightly from the all-time high set in June, a decline that follows typical seasonal trends. But July’s median price of $422,600 was still well up from a year ago, marking the 13th consecutive month of year-over-year price gains.

On a call with journalists, Yun said that lingering supply constraints could be part of the reason prices continue to rise, even as the number of home sales lingers near historic lows.

The supply of homes for sale at the end of July was 1.33 million units, which equals a four-month supply at the current sales pace, according to NAR. Although that’s up 20% from a year ago, it remains well below the six-month supply that economists say represents a balanced market.

“This is a transitional phenomenon that’s happening right now, where inventory is trying to increase back up to normal, but it’s not back up to normal yet” following disruptions from the COVID-19 pandemic, says Yun.

One unusual consequence of this situation is that newly built homes are now typically cheaper than previously owned homes, reversing longstanding trends.

During the second quarter of this year, the median price of a new home was $412,300, or 2.3% less than the $422,100 price for a median existing home, according to an analysis from the National Association of Home Builders.

“With the nation facing a housing affordability crisis, additional, attainable housing supply is the only way to sustainably ease housing cost burdens for American families,” says NAHB Chairman Carl Harris.

Sales activity climbed in all regions but the Midwest

Closed transactions for existing homes rose on the month in every region except for the Midwest, where they were unchanged in July at an annual rate of 920,000. That was down 5.2% from the previous year. The median price in the Midwest was $321,300, up 4.5% from July 2023.

In the Northeast, existing-home sales climbed 4.3% in July from June, to an annual rate of 490,000, an increase of 2.1% from July 2023. The median price in the Northeast was $505,100, up 8.3% from last year.

Existing-home sales in the South increased 1.1% from June, to an annual rate of 1.79 million in July, down 3.8% from one year before. The median price in the South was $372,500, up 2.3% from one year earlier.

In the West, existing-home sales rose 1.4% in July, to an annual rate of 750,000, also up 1.4% from a year ago. The median price in the West was $629,500, up 3.4% from one year ago.

Vice President Kamala Harris has announced a sweeping set of proposals on housing policy, giving voters their first look at what the housing market might look like under a Harris administration.

Harris unveiled the proposals as part of a populist economic plan that marked her first major policy announcement since replacing President Joe Biden at the top of the Democratic ticket in the 2024 presidential race against Republican Donald Trump.

Her signature housing policy calls for up to $25,000 in federal down payment assistance for first-time homebuyers who have paid their rent on time for at least two years. That dramatically expands on Biden’s prior proposal for a $10,000 tax credit for first-time buyers, which had limited additional down-payment assistance to first-generation homebuyers.

The Harris campaign says in a statement that the program would provide down payment assistance to up to 4 million first-time buyers over four years.

Other elements of the plan called for a new tax credit for builders incentivizing the construction of starter homes, curbs on investor purchases of single-family homes, and a ban on shared software platforms used by landlords to set rent, which critics say is a form of price fixing.

Altogether, Harris says she would push for construction of 3 million new housing units over a four-year term. It’s an attainable goal, with U.S. Census Bureau data showing that 1.5 million new privately constructed housing units were completed in 2023 alone.

Her key proposals, including down payment assistance, would require congressional approval. The nonprofit policy group Committee for a Responsible Federal Budget estimates that the new housing policies Harris proposes would cost $200 billion over four years, and more if they were made permanent.

Harris’ campaign vows follow a massive surge in home values that has left existing homeowners sitting on a mountain of equity, while freezing many prospective first-time buyers out of the market. In May, national home prices were up 48% from four years earlier, according to Case-Schiller.

“As the price of housing has gone up, the size of down payments have gone up as well. Even if aspiring homeowners save for years, it often still is not enough,” Harris said in a speech on Friday in the swing state of North Carolina.

Harris’ down payment proposal was light on specific details—who exactly would qualify for down payment assistance, and how would the funds be distributed? But the plan quickly sparked heated debate, with some housing policy experts praising the proposal and others warning it could fuel runaway increases in home prices.

The Trump campaign also quickly slammed the proposal, with Republican vice presidential candidate J.D. Vance claiming “Kamala Harris wants to give $25,000 to illegal aliens to buy American homes.”

It is unclear whether the Harris plan would have a citizenship requirement, but immigrants present in the country unlawfully are not eligible to apply for traditional, or “conforming,” mortgages. Depending on how the program was administered, that could also make them ineligible for federal assistance with a down payment.

Experts react to Harris’ down payment assistance plan

Several economists who spoke to Realtor.com cautioned that Harris’ plan could backfire by stoking demand in an already hot housing market, driving home prices even higher.

Ken Johnson, a professor of finance and the Walker Chair of Real Estate at the University of Mississippi, warns that offering widespread down payment assistance would be like “throwing gasoline on an already on-fire housing market.”

“The real symptom of what’s going on is that we’re short in supply. We’re dangerously short in supply. We just cannot build homes fast enough,” says Johnson. “You can’t make it easier for people to buy homes, and offer easier credit to buy homes, when you have the housing market so overpriced.”

Johnson argues that to bring home prices back into reach, the government should do more to help small and independent homebuilders secure financing.

One way, he explains, would be to launch a government-sponsored enterprise dedicated to purchasing construction loans, the way Fannie Mae and Freddie Mac purchase mortgages.

Tai Christensen, president of private-sector down payment assistance provider Arrive Home, acknowledges that a federal subsidy for first-time buyers might stoke housing inflation if it were not balanced with an increase in supply.

However, she argues that Harris’ proposed tax credits for homebuilders could offset the inflation risk by stimulating new construction, and that down payment assistance would be an important step to level the playing field and boost opportunities for homeownership.

“Anything that increases homeownership, specifically in marginalized, low- to moderate-income communities, we are in complete support of,” says Christensen. “Homeownership is the No. 1 vehicle for wealth creation for the majority of Americans, and to have opportunities to expand that benefit to more Americans, we’re completely in support of whatever that looks like.”

The National Association of Home Builders praised Harris for making housing and homeownership a centerpiece of her economic agenda.

“We are pleased that the foundation of her plan calls for the construction of 3 million new housing units because the primary way to tackle the nation’s housing affordability crisis is to increase the nation’s housing supply,” said NAHB Chair Carl Harris in a statement.

He said that new tax credits for builders would help boost construction, but warned that “any tax incentive to support the production of starter homes must be targeted to local market conditions and be widely available.”

Carl Harris, no relation to the vice president, also reiterated his group’s longstanding call to cut federal regulations and codes that he says are burdensome and costly to homebuilders.

‘The devil is in the details’

If Kamala Harris does receive congressional approval for a down payment assistance program, it wouldn’t be the first time the federal government has subsidized homebuyers.

In 2009, during the depths of the global financial crisis, Congress passed a similar $8,000 credit for first-time homebuyers. But 2009 was a very different situation, when home prices were plunging due to a huge pullback in demand and an influx of buyers was needed to stabilize the market.

Now, many economists believe we are in the opposite sort of crisis: The supply of homes is inadequate to meet demand, pushing home prices out of reach for many families.

“The housing market is still way out of whack compared to where it should be,” says professor Johnson. Following the Great Recession, “We in the U.S. and around the world did not build housing product for a decade, virtually none. So we fell way behind.”

From 1996 to 2006, the U.S. completed an average of 1.6 million new housing units every year. Construction plunged over the following five years, bottoming out at just over a half-million units in 2011. Since then, construction has slowly climbed each year, but it has yet to return to the levels seen prior to the 2007 housing market crash.

As builders constructed fewer homes after the crash, they also began focusing on larger, more expensive homes, which have higher profit margins. In 2015, the median square footage of new single-family homes peaked at 2,473, up from the 2,088 average in the decade through 2006.

New home sizes have slowly tapered since then, but remained well above the pre-financial crisis average last year, at 2,238 square feet.

Harris may hope that, by providing builder tax credits and buyer subsidies specifically in the first-time buyer category, it will stimulate the market for starter homes and encourage more builders to pivot toward more affordable homes suited for first-time homebuyers.

Arrive Home's Christensen notes that today, the starter home category may often include units in multifamily properties such as duplexes and quads, which are cheaper to build than free-standing homes, but still allow lower-income buyers to start building equity.

“When people think of starter homes, sometimes they have this kind of vision in their head of a white picket fence and a three-bedroom, two-bath rambler with a yard,” she says. “But planned urban developments are typically cheaper than your average suburban neighborhood, and specifically for first-time homebuyers, that's critical, because they just need to get their foot on the property ladder.”

Matthew S. Roland, assistant dean for the Real Estate Development program and clinical assistant professor at the University at Buffalo School of Architecture and Planning, notes that for an FHA mortgage with 3.5% down, a $25,000 down payment credit could cover the down payment for a home of up to $715,000.

However, at 20% down, the credit would cover the down payment for a home only up to $125,000, a price range that is virtually nonexistent aside from some condo units.

Roland says key questions about the program remained to be answered, including how homebuyers would qualify, whether they'd have to put some of their own money down as well, and whether the funds would be distributed as a tax credit or direct payment to the lender.

“Overall, I think it’s a program that has the potential to help,” says Roland. “That said, the devil is in the details.”

Mortgage rates inched up, with the average rate for a 30-year fixed home loan going from 6.47% last week to 6.49% for the week ending Aug. 15, according to Freddie Mac.

“While rates increased slightly this week, they remain more than half a percent lower than the same time last year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “In 2023, the 30-year fixed-rate mortgage nearly hit 8 percent, slamming the brakes on the housing market. Now, the 30-year fixed-rate hovers around 6.5 percent and will likely trend down in the coming months as inflation continues to slow.”

Last week, rates fell to their lowest level in over a year, and as a result, the housing market continued to move toward a more buyer-friendly direction, according to Realtor.com® economist Jiayi Xu in a recent analysis.

Despite this week’s uptick, the overall seismic shift in what have been stubbornly high rates may make the autumn housing market busier than the usually bustling summer market.

“This fall may see an extra boost from shifting housing conditions,” says Realtor.com senior economic research analyst Hannah Jones.

What other changes are coming down the pike? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in the latest installment of our “Weekly Housing Market Update.”

Mortgage rate forecast

In a welcome glimmer of good news, the latest consumer price index data reported the lowest level of inflation since 2021. (The CPI is a measure that examines the average change in prices over time that consumers pay for various goods and services, indicating inflation levels.)

This sign of economic stability provided more reassurance that the Federal Reserve will make “potential rate cuts in September and December, which should help put mortgage rates lower for the rest of the year,” says Xu. (While the Fed doesn’t set mortgage rates, Fed rates and mortgage rates tend to move in the same direction.)

After crunching all the latest economic data, Realtor.com economists predict rates will fall to 6.3% by the end of 2024—welcome news for weary buyers.

Whether sellers will be motivated to list their homes remains to be seen as 86% of homeowners in America still have mortgage rates below 6%.

“Rates will need to continue to trend lower to see a fully reenergized housing market,” says Jones.

Home prices continue to fall

Homebuyers have another number heading south to celebrate along with mortgage rates: a drop in list prices.

Median list prices fell 0.2% year over year for the week ending Aug. 10, marking 29 consecutive weeks of annual price growth below 1%. (In July, the national median list price was $439,950.)

The dip in list prices can be chalked up to the mix of homes for sale shifting toward smaller homes. So while buyers will pay less, they will also simply get less square footage to live in.

However, it’s important to note that what homes list for is somewhat different from sale prices, which have risen at a faster clip. Indeed, sale prices hit 4.1% in June, according to the National Association of Realtors®.

The rise in sale prices was due to actual sales shifting “toward more expensive, and likely larger, homes,” says Xu.

The number of homes for sale spiked

The total number of houses for sale increased by 35.5% for the week ending Aug. 10, marking a 40-week streak of growing for-sale homes compared with the same time last year.

Housing stock has trended higher on an annual basis over the past nine months, suggesting “that housing conditions are set to improve, especially on the heels of the recent downward mortgage rate trend,” says Jones.

As far as what fall buyers can expect, the Realtor.com Housing Forecast predicts the total number of houses for sale will climb by 14.5% annually in 2024.

In the meantime, fresh listings new to the market dipped by 2.2% for the week ending Aug. 10 year over year.

The mortgage rate lock-in effect continues to keep potential sellers out of the market, says Xu, while “concerns about a possible recession and big stock volatility may cause sellers who are also buyers to delay their plans and wait for more stability.”

The pace of the market slows

Homes spent five days more on the market for the week ending Aug. 10 compared with the same time in 2023. (The typical home spent 50 days on the market in July.)

This was the 14th straight week that the time a home spent on the market was longer than at the same time a year ago.

“Homebuyers this year may continue to contend with high prices and mortgage rates, but they’re starting to get some time back on their side compared to last year,” says Xu.

Inflation in the U.S. continued to cool last month, signaling imminent relief to homebuyers in the form of lower mortgage rates.

In the 12 months through July, the consumer price index rose 2.9%, according to data released by the Department of Labor on Wednesday. It marked the first time annual inflation has dropped below 3% since March 2021.

On a monthly basis, overall prices ticked up 0.2% from June. That gain was driven almost entirely by rising housing costs, which are reported on a delayed basis. Energy costs were flat on the month, and food prices rose modestly, ticking up 0.2% from June and 2.2% from one year ago.

For prospective homebuyers, the overall cooling of inflation toward the Federal Reserve’s 2% target is good news for mortgage rates, which have already fallen in recent weeks. The central bank is now viewed as extremely likely to begin cutting its current benchmark rate of 5.3% when policymakers next meet in September.

“Today’s data has reassured markets that they will get a rate cut in September and December,” says Realtor.com® senior economist Ralph McLaughlin. “This should put downward pressure on mortgage rates this fall and winter and will set the stage for a much better season for homebuyers in 2025.”

Mortgage rates hit their lowest level in more than a year for the week ending on Aug. 8, with the average rate on a 30-year fixed dropping to 6.47%, according to Freddie Mac.

Typically, mortgage rates follow yields on the 10-year Treasury note, which move in response to investor expectations about inflation, the economy, and future Fed rate moves. Yields on the 10-year swung between slight gains and losses in choppy trading following the new inflation data on Wednesday morning.

The Realtor.com economic team now projects average mortgage rates will fall to 6.3% by the end of this year.

Housing costs are now the biggest driver of inflation figures

Rising shelter costs accounted for 90% of the overall monthly price increases reported from June to July—but there is a major caveat due to quirks in the way shelter costs are calculated.

Shelter accounts for more than a third of the overall consumer price index, but is reported on a delayed basis that can lag up to six months. Costs for homeowners are reported as “owner’s equivalent rent,” or the estimated cost to rent the homeowner’s primary residence.

It means that inflation data for shelter may primarily reflect changes in rental markets up to half a year ago, rather than real-time changes to actual monthly costs for homeowners, who account for two-thirds of the population.

"While shelter inflation is on a disinflationary path, it is a highly lagged input into CPI so its contributions don’t reflect the current slowdown we’re seeing in the housing market," says McLaughlin. "We anticipate that as the shelter pig works its way through the CPI python, we’ll continue to get better readings through the remainder of the year."

Some economists have argued that the way housing costs are calculated has artificially boosted inflation figures, potentially prompting the Fed to wait too long to cut its benchmark rate.

"Is it possible that the Fed is too late? Until this month, the Fed seems to have been laser-focused on inflation and progress toward the 2% target. But shelter has been an outsized contributor to the consumer price index," says Bright MLS Chief Economist Lisa Sturtevant. "As the Fed has kept rates high, those higher rates have exacerbated housing costs by dampening new housing construction and increasing borrowing costs."

Sturtevant notes that, with housing costs removed from the index, the CPI has averaged just 1.7% since May 2023.

The White House has announced a number of new measures intended to spur the construction of more housing units and ease the affordability crisis for renters and homebuyers.

The actions announced on Tuesday include $100 million in new community grants to identify and remove barriers to affordable housing production and preservation, rule changes to provide greater interest rate predictability for state and local housing finance agencies, and proposals to streamline permitting requirements at the state and local levels.

The new measures are the first major housing policy announcement from the administration since President Joe Biden withdrew from the 2024 presidential race against Donald Trump, and Vice President Kamala Harris secured the Democratic nomination. They follow other actions as part of the “Biden-Harris Housing Plan” that the White House says will support the construction of 2 million new housing units.

“President Biden and Vice President Harris have put building more homes at the center of their economic agenda because rents are lower and homes are more affordable when we build more housing,” the White House said in a statement. “The President and Vice President have been laser-focused on lowering housing costs for renters and homeowners alike.”

The announcement comes as housing issues loom large in the 2024 race. Housing affordability currently sits near some of the lowest levels on record, with Freddie Mac estimating the country needs at least 1.5 million additional homes to ease a severe shortage.

“As a housing economist, I am excited to see ongoing housing policy announcements focused on supply during this election cycle,” says Realtor.com senior economist Ralph McLaughlin. “The current announcement by the Biden-Harris administration is focused on supply, something that housing economists like myself have been fixated on for the past few decades. It’s promising to see such policies that target the underlying cause of much of today’s housing troubles: a chronic undersupply of both market-rate and affordable housing stock.”

The newly announced measures include $100 million in new competitive grant funding through the Department of Housing and Urban Development’s Pathways to Removing Obstacles to Housing (PRO Housing) program. Communities across the country are eligible to apply for the funding, which is intended to help remove barriers to local housing production.

“This funding is designed to cut red tape, and make sure that we’re building more homes, especially affordable homes, with urgency because people need help now,” said HUD Acting Secretary Adrianne Todman in a statement.

The new grant funding is in addition to $85 million in PRO Housing grants that were awarded last month across 19 states and Washington, DC. Recipients will use those funds to update state and local housing plans, revise land use policies, and streamline the permitting process for housing construction, among other actions.

Tuesday’s announcement also touted a joint HUD-Treasury initiative to provide more interest rate certainty for state and local agencies that use certain federal financing for affordable housing projects. The program implements a floor and a cap, called an interest rate “collar,” on the benchmark Treasury rate used to calculate the all-in rate provided to those agencies.

U.S. Deputy Secretary of the Treasury Wally Adeyemo said the collar initiative will “help reduce the cost to construct more affordable housing that is so urgently needed in neighborhoods across the country.”

The White House also announced a number of proposals to speed certain construction projects, including accelerated historic preservation reviews for federal housing projects and proposals to expedite housing permits at the state and local levels.

McLaughlin says that of the newly announced measures, two in particular stand out: the administration’s focus on expediting housing permit approvals, and the effort to provide interest rate stability for new housing construction projects.

“These efforts will help the market respond to new demand in a more reasonable time frame with more predictability in interest rates for those actually paying for construction,” he says. “In tandem, they will jointly help supply be more responsive to demand, which is something that the housing market desperately needs.”

Harris has yet to put forth detailed policy proposals on housing, or any other issue, since launching her presidential campaign. However, early signs suggest that she plans to deliver a campaign message similar to that of Biden, who had emphasized increased federal funding for affordable housing programs and vowed a crackdown on “corporate landlords.”

At her first major campaign rally at the top of the Democratic ticket, Harris pledged to “take on corporate landlords and cap unfair rent increases.” It suggests she is picking up Biden’s campaign vow to press for federal legislation capping annual rent increases by large landlords at 5% for existing properties.

Trump for his part has said that, if elected, he would lower housing costs by halting unlawful immigration, slashing regulations, and opening up small portions of federal land for new development.

Mortgage rates sank this week, with the average rate for a 30-year fixed home loan going from 6.73% last week to 6.47% for the week ending Aug. 8, according to Freddie Mac.

“Mortgage rates plunged this week to their lowest level in over a year following the likely overreaction to a less than favorable employment report and financial market turbulence for an economy that remains on solid footing,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “The decline in mortgage rates does increase prospective homebuyers’ purchasing power and should begin to pique their interest in making a move.”

This drop in rates of late is significant enough to translate into “real savings” on a monthly housing payment, according to Realtor.com® Chief Economist Danielle Hale in a recent analysis. However, she notes that “buyer traffic and market competitiveness may amp up if mortgage rates remain low,” adding that “recession worries could limit some of the potential gains.”

With serious financial changes afoot, what will the housing market look like as the summer turns into fall? Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest installment of “How’s the Housing Market This Week?”

Mortgage rate predictions

As the economy cools and the Federal Reserve gets closer to its target inflation rate of 2%, investors have upped their expectations to two rate cuts this year.

As a result, buyers and sellers might see mortgage rates drop in September and December, according to Realtor.com senior economist Ralph McLaughlin. (While the Fed doesn’t set mortgage rates, the two numbers often move in the same direction.)

“Mortgage rate relief is arriving quicker than many expected, and the recent downward trend is encouraging news for potential homebuyers who have been waiting until next year to participate in the market,” says McLaughlin.

However, even though rates are in flux, they remain above 6%—which still exceeds existing mortgage rates for 86% of outstanding borrowers and could deter sellers from selling—and slow down buyers as well.

Home prices fell slightly

Median list prices fell 0.7% year over year for the week ending Aug. 3, and marked 28 consecutive weeks of annual price growth below 1%. (In July, the national median list price was $439,950.)

This downward trend in list prices differs from actual sales prices, which shot up 4.1% in June, according to the National Association of Realtors®.

A shift in the mix of homes for sale might explain this disparity, as smaller homes pushed the price per square foot up 3.1% in July, even though the median price held relatively steady.

However, “actual sales have shifted toward more expensive—and likely larger—homes,” Hale says, which explains the bump in sale prices.

The number of homes for sale increased

The total number of houses for sale increased by 35.9% for the week ending Aug.  3, marking a 39-week streak of growing for-sale homes compared with a year ago.

Fresh listings shot up by 6.7% for the same period, giving buyers more choices as the summer housing market draws to a close.

“More homes for sale is a much needed, buyer-friendly trend,” says Hale.

In addition, the increase in affordable inventory might be enough to draw in some buyers to the market this fall.

“Looking ahead, we expect this year’s elevated inventory to be able to absorb an unexpected demand that may come from falling mortgage rates this fall,” adds McLaughlin. “As such, we don’t expect home price growth to deviate much, if at all, from a stabilized trajectory.”

The pace of the market continues to crawl

Homes spent five days more on the market for the week ending Aug. 3 compared with this time last year. (The typical home spent 50 days on the market in July.)

Elevated prices and mortgage rates have caused buyers to stall and forced sellers to have more patience.

“For a 13th straight week, the time a home spent on the market was longer than at the same time last year, and the gap has been widening,” says Hale.

A slower time on the market is generally indicative of a market balance shifting in a buyer-friendly direction.

“Homebuyers this year may continue to contend with high prices and mortgage rates,” Hale explains. “But they’re starting to get some time back on their side compared to last year.”

Yet sellers also continue to be in a good position.

“Record-high levels of home equity have created options,” Hale says.

Democratic presidential nominee Kamala Harris on Tuesday announced her selection of Minnesota Gov. Tim Walz as her running mate for the November election.

Walz, an Army National Guard veteran and retired teacher, has pushed a number of affordable housing initiatives during his two terms as Minnesota’s governor. Democrats are likely to highlight that track record as they face Republican nominee Donald Trump in an election where the housing crisis has emerged as a key issue for voters.

Last year, Walz signed a $1 billion housing omnibus bill that had been passed by the state’s Democratic legislature. It marked the largest single investment in housing in Minnesota’s history.

“As one of the largest costs for families and most foundational human needs, our administration is making a generational investment in housing,” Walz said in a statement at the time. “Housing is central to growing our workforce and ensuring Minnesotans’ health, safety, and financial security.”

The package includes $200 million for down payment assistance programs, $200 million for housing infrastructure investments, and other funding for workforce housing and homelessness assistance.

Last month, the down payment assistance program went into effect, including $150 million devoted to helping first-generation homebuyers purchase their first home.

The program offers up to $35,000 for down payment assistance, in the form of a forgivable loan. If the homebuyer remains in their home for 10 years, half the loan is forgiven. After 20 years, the entire loan is forgiven.

The $150 million program is expected to help 4,500 first-generation homebuyers.

The omnibus bill also helped fund a $350 million investment to preserve and build over 4,700 units of housing across Minnesota.

Announced last December, the plan is the largest slate of development projects Minnesota Housing has ever approved.

“As one of the most basic human needs, housing provides a foundation for safety, stability, and economic growth,” Walz said at the time.

Tim Walz could bolster Democratic ticket’s credentials on housing

It’s still early in Harris’ campaign, after she jumped to the top of the ticket when President Joe Biden withdrew from the race on July 21.

But initial signs indicate that Harris plans to run her campaign largely in line with Biden’s messaging and policy proposals on housing affordability, a topic of rising significance to voters as home prices and mortgage rates remain high.

At her first major campaign rally as the presumptive Democratic nominee, Harris pledged to “take on corporate landlords and cap unfair rent increases.”

That suggests she is picking up Biden’s campaign vow to press for federal legislation capping annual rent increases by large landlords at 5% for existing properties.

It’s a bold proposal, as there has never been an attempt at federal rent control. However, some economists warn the plan could exacerbate the housing crisis by discouraging new construction.

The Biden administration has also proposed various forms of assistance for homebuyers, including a $10,000 tax credit for first-time homebuyers. But that plan, like a national rent cap, would require congressional approval.

Now Walz joins the ticket with a track record of actually implementing programs similar to those proposed by the Biden administration, such as Minnesota’s down payment assistance program for first-generation homebuyers.

Economists will debate whether such programs provide effective assistance to homebuyers, or simply fuel higher home prices by subsidizing them for buyers. But for voters who approve of the Biden-Harris housing agenda, Walz will bring a track record of similar policy achievements.

On the other hand, Walz is known for his fairly progressive track record in Minnesota, particularly since Democrats took control of the state’s legislature in 2022. His addition to the ticket might not win over many moderates who are skeptical of the Biden administration’s approach to housing affordability.

In a statement following his selection as Harris’ running mate, the Trump campaign slammed Walz as “a dangerously liberal extremist.”

“By picking Tim Walz as her running mate, Kamala Harris not only bent the knee to the radical left, she doubled down on her dangerously liberal, weak, and failed agenda,” the Trump campaign said.

Mortgage rates dipped this week, with the average rate for a 30-year fixed home loan going from 6.78% last week to 6.73% for the week ending Aug. 1, according to Freddie Mac.

“Mortgage rates declined to their lowest level since early February,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

While falling mortgage rates as summer winds down is very welcome news, many would-be buyers are taking a timeout, hoping for a possible larger mortgage rate cut this fall. The wait-and-see approach seems to be trickling down to all aspects of homebuying and selling.

“The housing market is showing subtle signs of change this week, with new listings falling, total inventory growing, and homes spending longer on the market,” says Realtor.com® economist Joel Berner in his latest analysis.

Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest installment of “How’s the Housing Market This Week?”

The autumn mortgage rate outlook

Anticipation is running high for a substantial mortgage rate cut soon, yet Realtor.com economist Jiayi Xu advises buyers to keep their expectations in check.

“While the potential rate cut in September will be a good start to bring the rate down, subsequent drops in mortgage rates may not be as significant as many anticipated because the market is already pricing in rate cuts, and such expectation is reflected by recent rate drops,” says Xu.

In other words, without a meaty rate cut, the needle might not truly move on a housing market largely stuck in neutral due to the “lock-in effect,” says Berner.

Indeed, according to a recent analysis from Realtor.com, 86% of outstanding mortgage debt has a rate of sub-6%, and more than three-quarters have a rate of 5% or lower.

Xu thinks this could mean the housing market may remain sluggish.

Home prices fell slightly

The median listing price dipped in the week ending July 27, falling 0.2% year over year, marking 27 consecutive weeks of annual price growth below 1%. (The national median list price was $445,000 in July.)

This slump is shaped in part by a change to the mix of listings on the market as the price per square foot grows and the size of homes on the market decreases.

“As home prices hover at or near record highs, affordability continues to be the top challenge,” Xu says.

As a result, homebuyers looking for an affordable home may meet their needs with one of the smaller homes that’s currently available.

If mortgage rates fall and more sellers may list properties, more listing price cuts could also be on the way.

The number of homes for sale decreased

New listings were down by 2.3% for the week ending July 27 compared with the year prior. This dip comes after fresh listings rose for 15 of the past 17 weeks.

“Potential sellers are not seeing the price increases they hope for in the market and are choosing not to list their homes for sale,” says Berner.

Even though new listings were indeed down, the total number of houses for sale increased by 37.1% year over year in the week ending July 27. This marks a 38-week streak of growing for-sale homes compared with a year ago.

The pace of the market continues to slow

Homes spent five days more on the market for the week ending July 27 compared with this time last year. (The typical home spent 50 days on the market in July.)

Continued high prices and high mortgage rates have forced sellers to wait longer to complete their home sales.

“This summer’s slowdown has continued, as each of the past 12 weeks has seen homes sitting on the market longer than they did in the previous year,” says Berner.

While homes are selling at a slower pace recently, they are still selling faster than they were in the years before COVID-19, so homebuyers who see a great home should not wait too long to make an offer. Those who choose to wait to enter the market have reason to remain optimistic.

“With broader economic indicators remaining strong, there is hope that mortgage prices will soon fall and breathe life into the currently slow market,” Berner explains.

Median home prices fell in July, marking the first-ever seasonal decline in a month that’s typically a peak time for home sales.

The national median list price dipped from $445,000 in June to $439,950 in July, according to a new monthly housing report by Realtor.com®.

This downturn can be attributed to a sluggish summer housing market, with buyers and sellers looking for more economic breaks before making a move.

“As mortgage rates fell in July to their lowest since March on expectations that the Federal Reserve will cut rates as early as September, we suppose some homebuyers may be holding out for lower rates over the next few months,” says Realtor.com senior economist Ralph McLaughlin in his analysis.

With many buyers watching mortgage rates from the sidelines, home sales are now moving at the slowest rate since 2020.

This hesitancy among buyers likely also contributed to prices being slashed on 18.9% of listings in July, up from 15.5% a year ago.

“Sellers are becoming more grounded with patience and price expectations,” McLaughlin adds.

Indeed, the share of listings with price cuts is the highest since 2022.

This all adds up to good news for buyers who have been waiting for home prices to come back down to earth.

Increase in homes for sale

While many homebuyers sat out July, those who did venture into the housing market fray had more listings to choose from than the same time last year.

The total number of homes for sale in July was 36.6% higher than the year prior, marking the ninth consecutive month of growth.

It “now sits at a post-pandemic high,” says McLaughlin. “It’s a welcome sign that the housing market is normalizing, and it tells us the market is healing.”

All four regions of the U.S. saw an increase in active home listings, with the South leading the way at 47.6%, followed by the West at 35.4%, the Midwest at 22.7%, and the Northeast at 14.7%.

Metros that saw the largest increases in the number of homes for sale included Tampa, FL, at 94.9%; Orlando, FL, at 78.7%; and San Diego at 77.7%.

Much like home prices, the jump in inventory is likely the result of one main factor: mortgage rates.

“The decrease in mortgage rates seen in July likely contributed to an increased pace of growth in listing activity,” says McLaughlin.

Where the fresh listings are

Newly listed homes surged 3.6% above last year’s levels, reflecting a notable increase in seller activity.

Buyers looking for the most fresh housing choices should head West, where there are 7.3% more newly listed homes than in July 2023. New listings also grew by 3% in the Northeast and 0.9% in the Midwest.

Only the South saw fresh listings fall, with 0.5% fewer new listings this July than last.

The metros that saw the largest increase in fresh listings compared with last year included Seattle, at 37.3%; San Jose, CA, at 30.8%; and Columbus, OH, at 17.4%.

The home price paradox

Despite the overall decline in the national median list price, it remained stable compared with the same time last year, when it was $440,000.

“However, when a change in the mix of inventory toward smaller homes is accounted for, the typical home listed this year has increased in asking price compared with last year,” says McLaughlin.

This somewhat confusing data is due to the fact that the median price per square foot continues to rise, increasing 3.1% in July compared with the same time last year.

The price per square foot in the 50 largest metros shot up between 24.1% and 81.9% compared with July 2019.

However, the rise in price per square foot has a silver lining for budget-minded buyers.

“This indicates that the inventory of smaller and more affordable homes has grown in share,” McLaughlin explains.

In July, as in the previous five months, the growth in homes priced in the $200,000 to $350,000 range outpaced all other price categories, as the number of homes for sale in this range grew by 47.3% year over year.

Homes are still lingering on the market

The typical home spent 50 days on the market in July, five more days than the same time last year and five more days than last month.

“July marks the fourth month in a row where homes spent more time on the market compared with the previous year as inventory continues to grow and home sales remain sluggish,” says McLaughlin.

However, this trend might change soon.

“We expect selling activity to continue to normalize as rates inch their way down over the next year, with potentially an unusual uptick in September if the Fed decides to cut rates,” McLaughlin predicts.

Mortgage rates may remain high for the rest of the summer, but there are signs that could change in the fall.

The Federal Reserve’s Open Market Committee left its base interest rate steady at a range of 5.25% to 5.5% on Wednesday.

The Fed released a statement after its meeting concluded that read in part that “it does not expect it will be appropriate” to lower borrowing costs “until it has gained greater confidence.”

Addressing the real estate market, Chairman Jerome Powell said: “In the housing sector, investment stalled in the second quarter after a strong rise in the first. Improving supply conditions have supported resilient demand and the strong performance of the U.S. economy over the past year.”

Yet confidence is on the horizon for many.

“Investors are nearly unanimous in expecting a Fed rate cut in September,” says Realtor.com® Chief Economist Danielle Hale. “A rising unemployment rate and moderating job growth combined with further slowing inflation have convinced markets that policy could be loosened a tick.”

Hale points to recent inflation and labor market data that has softened “somewhat faster than the Fed expected in June” as a reason why the Fed might finally lower rates for the first time in four years.

The Fed acknowledged this slowing economy in its statement as “some further progress” versus “modest further progress” in June, Hale points out.

While inflation has fallen from its peak two years ago, it still remains above the Fed’s 2% target. The latest data shows annual inflation at 3%.

While the Fed has yet to lower rates in 2024, it hasn’t raised rates for a year.

“The last time the Fed raised rates was at its July 2023 meeting,” says Hale. “If the Fed lowers its key rate, mortgage rates could fall. Even though they are not directly tied to the Fed’s short-term rates; they have been following a similar path.”

As of Wednesday afternoon, mortgage rates averaged 6.78% for 30-year fixed loans, according to Mortgage News Daily.

Once rates fall significantly, more homeowners are expected to list their properties, alleviating the housing shortage that has persisted since the COVID-19 pandemic. Many buyers have refrained from purchasing a home due to challenging mortgage rates.

Sellers, meanwhile, have been reluctant to list their homes due to their existing low interest rates.

Indeed, many potential sellers have a rate well below today’s market rate, with 87% of outstanding mortgage loans at a sub-6% rate, according to data from a report by Realtor.com.

Once rates fall, it could have the long-awaited trickle-down effect on stubbornly high home prices and low housing stock still well below pandemic levels. But in this affordability-challenged housing market, nothing is for certain.

“For home shoppers and sellers, I continue to expect that peak mortgage rates are in the rearview, but volatility remains a risk, complicating moving decisions for home sellers, homebuyers, and renters alike,” says Hale.

Mortgage rates inched up—just barely—this week, with the average rate for a 30-year fixed home loan going from 6.77% last week to 6.78% for the week ending July 25, according to Freddie Mac.

“Mortgage rates essentially remained flat from last week but have decreased nearly half a percent from their peak earlier this year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data.”

That’s because the magic mortgage rate number hasn’t moved downward enough to revive a sluggish housing market.

“Not only do elevated mortgage rates eat into homebuyer demand by holding back their buying power, we also see an impact on inventory as higher rates have tended to keep more sellers on the sidelines,” says Realtor.com® Chief Economist Danielle Hale.

But relief might soon be on the way for potential buyers.

“With the hope that the economy keeps moving toward the right direction, we expect the falling mortgage rates to help lower borrowing costs and the rising inventory to gradually push prices down,” Realtor.com economist Jiayi Xu says in her latest analysis.

Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest installment of “How’s the Housing Market This Week?”

The current real estate climate

The summer market hasn’t seen as much heat this year as it typically has in the past.

“With home prices continuing to hover at or near record highs, mortgage rate swings have an outsized impact on affordability and transaction activity,” says Hale.

Case in point: Both new-home sales and existing-home sales dipped in June.

But luckily, there have been some buyer-friendly signals recently.

Most notably, the market-estimated odds of the Federal Reserve implementing at least a one-quarter-point rate cut by September are a whopping 96%, according to Hale. (While the Fed doesn’t set mortgage rates, the two numbers often move in the same direction.)

Yet nothing in the current housing market seems to be a sure thing.

“The upcoming presidential election continues to deliver surprising twists,” Hale adds. Those unforeseen developments, in turn, might affect the economy.

Home prices are flat

While mortgage rates constantly change, the median list price remained the same compared with the previous year for the week ending July 20. (In June, the median home cost $445,000.)

This has marked 26 consecutive weeks of price growth below 1%.

Even though prices aren’t technically going up, the rising price per square foot continues to pose affordability challenges, according to Xu—especially for first-time buyers.

“Similar-sized homes remain more expensive than they were a year ago,” Xu explains. “Fortunately, smaller and more affordable homes are coming to market, especially in the South.”

The number of homes for sale increased

Housing stock was up for the week ending July 20, with fresh listings rising by 6.4% compared with the year prior. This marks 15 out of the past 16 weeks with new listings growth.

Overall, the total number of homes for sale (including newly listed and those that have lingered on the market) jumped 36.9% above year-ago levels, continuing a now 37-week streak of increases.

While the trend in increasing home stock is welcomed, Xu notes that the number of new homes for sale is actually historically low.

“Despite nearly eight months of building inventory, buyers still see more than 30% fewer homes for sale compared with pre-pandemic,” Xu explains.

The pace of the market slows

The typical home for sale spent four more days on the market during the week ending July 20 compared with the same period last year.

While the market moved one day faster than the previous two weeks, four days is the second-longest additional time on the market since last August.

“A longer time on the market means buyers feel less urgency and won’t have to move as quickly as last year,” Xu says.

Sellers also seem to be more patient as they wait for a buyer to make an offer. The share of for-sale homes that were delisted declined to 5.7% at the end of the first half of 2024, from 5.2% in June 2023.

“That should help nudge the balance of supply and demand slightly toward buyers, and set up the possibility of more home sales activity this fall as mortgage rates ease,” Hale explains.

The numbers: Sales of newly built homes in the U.S. dipped in June as buyers continue to deal with an unaffordable housing market.

Buyers are constrained by high home prices and elevated mortgage rates. Sales of new homes are at the lowest level since November 2023.

Sales of newly built homes in the U.S. fell 0.6% to an annual rate of 617,000 in June, from a revised 621,000 in the prior month, the Commerce Department reported Wednesday.

The number is seasonally adjusted and refers to how many homes would be built over an entire year if builders continued at the same pace every month.

The pace fell short of expectations on Wall Street. Economists surveyed by Dow Jones Newswires and the Wall Street Journal expected new-home sales to increase to 640,000.

The rate of new-home sales was mixed across the nation, falling the most in the Midwest and the Northeast.

The data from June were revised to 617,000 from an initial reading of 619,000.

New-home sales data are volatile month over month and are often revised.

Key details: The median sales price of a new home sold in June rose to $417,300 from $407,100 in the prior month.

The supply of new homes for sale rose to 2.2% between May and June. New-home inventory in June was at the highest level since October 2022.

New-home sales fell in the Midwest and Northeast but inched back up in the South and the West.

Overall, sales of new homes were down 7.4% compared with the previous year.

Big picture: The entire residential real-estate industry, including mortgage brokers, real-estate agents and home builders, are feeling the effects of high mortgage rates and home prices.

While the national figures don’t show a dip in home prices in June, builders in July said they have cut prices and increased incentives to home buyers in order to boost sales. Builder confidence in the market is at a seven-month low.

Builders also have a significant supply of homes to sell, as seen by elevated inventory levels.

What are economists saying? “The bigger picture here is that the spring bounce in sales appears to have reversed. This is partly a response to the sharp 40 [basis point] rise in mortgage rates in April, which has since steadily unwound,” Ian Shepherdson, chairman and chief economist at Pantheon Macroeconomics, wrote in a note.

“Combined existing and new home sales in June was not far below the readings seen late last year but was the slowest monthly pace since 2011,” Stephen Stanley, chief economist at Santander U.S., wrote in a note.

High home prices and rates “combined to torpedo affordability, and homebuying demand has deteriorated,” he added, which is why inventory has increased. Stanley also noted that the number of completed new homes on the market is at the highest level since 2009.

Market reaction: Most major home builder stocks, such as D.R. Horton, KB Home, Lennar and Toll Brothers, were down in early trading on Wednesday. The yield on the 10-year Treasury note was under 4.3%.

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Home prices hit a new high in June even as the number of closings slipped again, continuing recent trends in a market battered by soaring mortgage rates.

Total existing-home sales dropped 5.4% from May, to a seasonally adjusted annual rate of 3.89 million in June, the National Association of Realtors® reported on Tuesday. The June sales figure, which excludes new construction, represented a 5.4% drop from one year ago and is the lowest in 13 years.

The median sales price for existing homes hit a new high of $426,900 in June, up 4.1% from one year ago and topping the previous record of $417,200 set a month earlier. Prices rose in all four U.S. regions.

“The housing market story seems almost the same month to month, like a ‘Groundhog Day’ with home sales stuck at low levels, home prices hitting record highs,” and mortgage rates little changed, NAR Chief Economist Lawrence Yun said on a conference call with journalists.

But offering hope to prospective homebuyers, he added that there are signs the market is beginning a “slow shift” away from a seller’s market toward a market more favorable to buyers.

“Homes are staying on the market a little longer, the multiple offers are dissipating, so maybe a shift away from sellers, and maybe soon we will be entering a buyer’s market,” he said.

The number of unsold existing homes on the market rose 3.1% from the previous month, to 1.32 million at the end of June. That’s equivalent to a 4.1-month supply at the current monthly sales pace, the highest level since May 2020.

Still, it’s well below the six months of inventory that is considered a balanced market, as the mortgage rate “lock-in effect” continues to discourage homeowners who are paying low rates on older mortgages from selling and assuming a higher rate on a new home.

Rates for a 30-year fixed mortgage averaged 6.92% in June, more than double their ultralow levels three years ago, according to Freddie Mac. Rates have since inched down, to 6.77% last week, and are expected to slowly cool with the Federal Reserve widely expected to begin cutting its benchmark rate in June.

“Although mortgage rates crested in early May, topping out at 7.22%, they remained above 7% for the better part of the month—when many June homebuyers would have needed to lock in a mortgage rate,” says Realtor.com Chief Economist Danielle Hale. “Combined with still high and climbing home prices, elevated costs meant that fewer buyers were able to get to the closing table in June.”

Faced with high prices, buyers wait for rate cuts

Mortgage rates last month stood close to where they were in June 2023, when they averaged 6.75%. But despite rising inventory, home sales were lower than a year ago.

“There is more inventory out there to choose from now, but a big difference is that home prices in most markets are higher than they were a year ago and more prospective homebuyers are simply priced out,” says Bright MLS Chief Economist Lisa Sturtevant.

Another major difference from last year, she adds, is the waiting game for buyers who expect mortgage rates to fall as the Fed’s September meeting grows closer.

“Some prospective buyers are simply waiting for mortgage rates to come down after the Federal Reserve cuts rates, most likely in September,” she says. “With inflation cooling and the job market still solid, rate cuts are now almost a foregone conclusion, which means those buyers who can wait are doing so.”

Although the Fed is expected to hold its effective rate steady at 5.3% when it meets later this month, bond markets now price in a 94% probability of a quarter-point rate cut during the September meeting.

Mortgage rates, which track yields on 10-year Treasury notes, could begin falling even before a Fed rate cut, as the central bank’s plan to loosen policy becomes more clear.

“The housing market is currently frozen but should slowly recover if the more recent downward trend in mortgage rates is sustained,” says Thomas Ryan, North America economist at Capital Economics.

Ryan is forecasting mortgage rates to drop to 6.5% by the end of the year, and 6% by the end of 2025.

Sales rise only for homes priced at $1M-plus

The NAR data for June shows that the only category of homes that saw an annual uptick in sales was the one priced above $1 million.

The number of sales of homes priced at least $1 million rose 4% from a year ago. Meanwhile, sales dropped 27% for homes priced below $100,000, 18% for homes in the $100,000 to $250,000 range, 12% for the $250,000 to $500,000 range, 8% for the $500,000 to $750,000 range, and 2% for $750,000 to $1 million.

Closed transactions for existing homes dropped in every U.S. region, the report finds.

In the Northeast, sales declined 2.1% from May, to an annual rate of 470,000, down 6% from June 2023. The median price in the Northeast was $521,500, up 9.7% from one year earlier.

Midwest sales decreased 8% from one month ago, to an annual rate of 920,000 in June, down 6.1% from the prior year. The median price in the Midwest was $327,100, up 5.5% on the year.

Sales in the South dropped 5.9% from May, to an annual rate of 1.76 million in June, down 6.9% from one year before. The median price in the South was $373,000, up 1.7% from last year.

And in the West, sales declined 2.6% in June, to an annual rate of 740,000, unchanged from a year ago. The West posted the highest median sales price of the regions, at $629,800, up 3.5% from June 2023.

Yun says that prices continue to rise despite slowing sales in part because there are few distressed sellers who are desperate to unload their properties.

“Even though we are seeing more listings, those listings are healthy listings—people switching jobs, maybe people are moving from retirement to a smaller sized home,” he says. “Those who are putting their homes on the market, it doesn’t appear to be a desperate sale.”

In his lengthy speech accepting the Republican presidential nomination on Thursday, Donald Trump touched on dysfunction in the housing market as he pressed his case to replace incumbent President Joe Biden.

Tying rising housing costs to inflation, a lingering weakness for Biden, Trump exaggerated several statistics even as he described the nation’s real housing affordability crisis.

“Under this administration, our current administration, groceries are up 57%, gasoline is up 60% and 70%, mortgage rates have quadrupled, and the fact is, it doesn’t matter what they are because you can’t get the money anyway. Can’t buy houses. Young people can’t get any financing to buy a house. The total household costs have increased an average of $28,000 per family under this administration,” said Trump.

All of those figures are overstated, although they are directionally correct and point to real pain for consumers after years of rising prices, housing costs, and interest rates.

Trump’s campaign has offered few specifics on how he’d lower housing costs if elected. But his increasing attention to the issue could be an early sign of how he plans to counterattack Biden, who has made housing a signature issue of his campaign after calling for national rent caps and accusing Republicans of siding with “corporate landlords.”

“We appreciate the ongoing inclusion of housing and homeownership in national political discussions,” says Realtor.com® senior economist Ralph McLaughlin.

The Republican Party’s 2024 platform even lists “housing affordability” first under a section devoted to “bringing back the American dream.”

The platform reads: “To help new home buyers, Republicans will reduce mortgage rates by slashing Inflation, open limited portions of Federal Lands to allow for new home construction, promote homeownership through Tax Incentives and support for first-time buyers, and cut unnecessary Regulations that raise housing costs.”

Here’s what we know about the housing market and the economy as the election heats up:

What is the state of inflation and the economy?

In fact, grocery prices are up 21% and gasoline is up 35% from January 2021, when Biden took office, according to the Labor Department’s consumer price index.

Although those increases aren’t as large as Trump claims, they have been significant and painful for many households.

Inflation has been one of Biden’s weakest domestic issues, polling consistently shows. Overall prices are up 19% since he took office, and low-income and working-class families have felt the brunt of the impact.

Although annual inflation rates have fallen dramatically from their peak of nearly 9% two years ago, to just 3% last month, prices remain much higher than they were four years ago.

Other economic indicators, including the unemployment rate and gross domestic product, remain remarkably strong. The stock market is also near record highs, with the S&P 500 up more than 40% since Biden took office.

But for voters still struggling to afford groceries and basic necessities each month, those indicators might seem like abstractions. Trump is hoping to pin that discontent on Biden and gain votes in November.

What is the state of mortgage rates?

Mortgage rates are also painfully high, but they have not quadrupled as Trump claimed.

Current average mortgage rates of 6.77% are more than double the record low they touched in early January 2021, just before Biden took office, according to Freddie Mac.

Even at their recent peak of nearly 7.8% last fall, mortgage rates were less than triple the record-low figure of 2.65%. But once again, while exaggerating the specifics, Trump is pointing to a real issue causing pain for consumers.

Mortgage rates have increased dramatically as the Federal Reserve raised its benchmark rate to fight inflation. That’s significantly increased monthly payments for new homebuyers, forcing many to delay their house hunt or decrease their price limit.

Rising home prices haven’t helped. Nationally, they have jumped 54% in the past five years, according to the Case-Schiller home price index.

Overall, home affordability is at its lowest level in about four decades, according to a recent Realtor.com analysis of home prices, incomes, and mortgage rates.

The Fed is widely expected to cut interest rates at its September meeting, which should lower mortgage rates. Some Republicans have loudly decried the prospect of a Fed rate cut, fearing it could boost Democrats in the November election.

Fed Chair Jerome Powell has said the central bank acts only on economic data, and will not consider the election one way or the other as it weighs rate cuts.

What’s happening with household expenses and financing?

Household expenses have risen in recent years, but there is no published data to support Trump’s claim that “total household costs have increased an average of $28,000 per family” since Biden took office.

Labor Department data shows that average household expenditures increased by $11,635, to $72,967, from 2020 to 2022, the latest year available.

Inflation has slowed dramatically since its 2022 peak, and it would be surprising if household expenditures continued to rise at that pace in the subsequent two years. But even if they did, they wouldn’t reach the figure cited by Trump.

It’s unclear where Trump got the $28,000 figure, which doesn’t match any of the widely used federal data on the issue.

There’s also limited evidence to support Trump’s claim that “young people can’t get any financing to buy a house.”

As interest rates rise, many lenders do tighten credit standards for borrowers. But the Fed’s quarterly survey of lenders on this subject hasn’t found a huge increase in banks cracking down on prospective mortgage borrowers.

Lending standards for conforming mortgages remained basically unchanged in the first quarter of this year, the survey found. Less than 2% of banks reported tightening credit standards for those loans during the quarter, while 3.5% reported easing standards.

As well, the homeownership rate for people under 35 is higher now than it was before the COVID-19 pandemic, casting doubt on the claim that it is impossible for young people to obtain a mortgage.

The homeownership rate for that age group averaged 36.7% in 2019, before spiking as high as 40.6% in early 2020, when pandemic restrictions caused upheaval and many people fled large cities in favor of suburbs and smaller towns. Since then, the under-35 homeownership rate has trended down, but in the first quarter remained above pre-pandemic levels at 37.7%.

"While the homeownership rate for young households has indeed fallen over the past two years, it remains higher than most of the prior decade, and at 37.7%, it sits just under the historical average of 38.8%," says McLaughlin. "That said, stubbornly high prices and interest rates have surely made it a challenging time for young households to get their foot in the door of homeownership. We expect some marginal improvement for homebuyers over the next 12 months as mortgage rates inch downward."

Mortgage rates dipped this week, with the average rate for a 30-year fixed home loan going from 6.89% last week to 6.77% for the week ending July 18, according to Freddie Mac.

“The 30-year fixed-rate mortgage fell to its lowest level since mid-March, dropping 12 basis points from last week,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Mortgage rates are headed in the right direction and the economy remains resilient, two positive incremental signs for the housing market.”

This should come as good news, but Khater also points out the following: “Homebuyers have yet to respond to lower rates, as purchase application demand is still roughly 5% below Spring, when rates were approximately the same. This is not uncommon: sometimes as rates decline, demand weakens, and the apparent paradox is driven by buyers making sure rates don’t decline further before they decide to purchase.”

Here’s a snapshot of the latest housing market data and what it means for homebuyers and sellers in our latest installment of “How’s the Housing Market This Week?”

Mortgage rates take a turn

For the past few months, inflated mortgage rates have sidelined both buyers and sellers, leaving them in a state of limbo.

“This week’s data revealed a housing market in a holding pattern,” notes Realtor.com® economist Ralph McLaughlin in his analysis. “The small movements we do observe this week favor buyers: no price growth, a slower market, and more price reductions.”

“Mortgage rate relief has not arrived as quickly as many expected,” adds Realtor.com economist Jiayi Xu. “But the recent downward trend is encouraging news for homebuyers who have been hindered by high rates.”

The 10-year Treasury fell last week on better than expected inflation readings, and rates also fell by 7 basis points on a year-over-year basis—the first such decline in nearly three years.

“Fortunately, June’s more moderate jobs report and cooling [consumer price index] were solid readings that should help the Fed gain more confidence that the economy is moving in the right direction and could raise hopes for a rate cut signal in the July FOMC statement,” Xu explains.

Xu says this development should help interest rates, including mortgage rates, continue to drop, especially if the economy keeps making progress.

Home prices remain flat

In June, the median home cost $445,000.

Listing prices were flat year over year for the week ending July 13, and marked 25 consecutive weeks of price growth below 1%.

Yet since the median price per square foot grew in June by 3.4%, McLaughlin says, “buyers shouldn’t necessarily rejoice just yet.”

“Price growth per square foot continues to be positive, suggesting homes are still more expensive than they were last year,” he explains.

Housing stock is up

The number of homes actively for sale continued to grow, with buyers seeing 35.8% more listings for the week ending July 13 than last year.

For the 36th straight week in a row, there were more homes listed for sale versus the previous year.

Fresh listings were also up by 8.8% for the week ending July 13 compared with 12 months ago.

New listings have increased 14 out of the past 15 weeks—which McLaughlin says should help keep prices in check.

“Looking ahead, we expect the rising inventory to gradually exert downward pressure on price growth and falling mortgage rates to help lower borrowing costs, providing more relief to potential homebuyers,” McLaughlin says.

While the number of newly listed homes increased by 6.3% annually in June, this rate is roughly half of what it was two months ago. And buyers still see more than 30% fewer homes for sale compared with before the COVID-19 pandemic.

“Broadly speaking, the number of new homes for sale remains historically low and is still below the 2017 to 2022 levels, even with recent improvements,” says McLaughlin.

Although buyers might see more houses on the market this summer than last, they will ultimately have fewer options than were typical before 2023.

The pace of home sales slows

The typical home spent 45 days on the market in June.

For the week ending July 13, the average home for sale spent five more days on the market compared with the same period last year.

This ties with last week, marking the longest additional time on the market since August 2023, according to McLaughlin.

“A longer time on the market means buyers won’t have to move as quickly as last year, while sellers will need to be more patient,” says McLaughlin.

Construction activity on single-family homes dropped for the fourth straight month in June, as high interest rates weighed on building activity.

Single-family housing starts were at a seasonally adjusted annual rate of 980,000 last month, down 2.2% from May, according to U.S. Census data released on Wednesday. Permits for single-family homes also dropped 2.3% on the month, to a rate of 934,000.

Overall housing starts rose in June, driven by a 19% monthly increase in multifamily units, which are more volatile from month to month. Multifamily starts jumped to a four-month high of 373,000 annualized.

The slowdown in single-family home construction comes as higher interest rates weigh on both homebuyers and builders. Still, the level of newly built homes for sale is at its highest since fall 2022, as measured by months of inventory at current sales paces.

The U.S. had 9.3 months of inventory of new homes for sale in May, according to census data, compared with a total market inventory of 4.4 months. Six months of inventory is considered a balanced market, indicating the outsized role new construction plays in the current housing market, experts say.

Sales of newly built homes dropped 11% in May from the prior month, as high mortgage rates put a damper on the usual spring buying season. Builders have responded by shifting to smaller, more affordable homes for new builds.

The median price of new homes sold in the U.S. dropped below that of existing homes in May, reversing a longstanding trend.

“Demand for single-family housing is still strong. However, higher mortgage rates and record-high home prices have caused some prospective buyers to pause their home search,” says Bright MLS Chief Economist Lisa Sturtevant. “Builders continue to offer rate buydowns and upgrades to buyers, but traffic has dropped as affordability has become a growing concern and the inventory of existing homes has expanded.”

Homebuilders wait for relief on interest rates

The total number of single-family homes and apartments under construction was 1.56 million in June. This was the lowest total since January 2022.

Mortgage rates averaged 6.92% in June, according to Freddie Mac. High interest rates have also raised financing costs for builders, who must pay higher interest rates on loans to fund their projects.

"With mortgage rates hovering around 7% throughout the month of June, homebuyers and homebuilders have remained cautious," says Realtor.com® senior economist Joel Berner.

On Tuesday, a survey from the National Association of Home Builders found that builder confidence dropped slight in July, hitting its lowest level since December 2023.

“Lower single-family starts are in line with our latest builder surveys, which show that, while builders are concerned about the current high interest rate environment, they believe that mortgage rates will moderate in the coming months and lead to higher construction in the latter part of 2024,” says Carl Harris, chairman of the NAHB.

The survey also revealed that 31% of builders cut home prices to bolster sales in July, above the June rate of 29%. The average price reduction held steady at 6% in July for the 13th straight month. Meanwhile, the use of sales incentives held steady at 61% in July, the same reading as in June.

However, following promising declines in inflation, the Federal Reserve is widely expected to begin cutting its benchmark rate starting in September, which could bring relief to homebuyers and stimulate the housing market.

“An improving interest rate environment will help buyers as well as builders and developers who are contending with tight lending conditions and high interest rates,” said NAHB Chief Economist Robert Dietz. “And with home inventory at a relatively low 4.4 months’ supply, builders are prepared to increase production in the months ahead.”

President Joe Biden has called on Congress to pass legislation that would cap annual rent increases in apartments owned by large landlords at 5% annually.

The White House released the plan on Tuesday as Biden traveled to Nevada, one of the swing states where soaring housing costs have emerged as a key issue in his reelection battle against Republican nominee Donald Trump.

Biden’s proposed rent cap would apply only to existing rentals managed by “corporate landlords” who own more than 50 units, covering about half of the U.S. rental market. Those landlords would have to either agree to cap rents at 5% annually, starting this year and for the next two years, or lose special tax incentives, according to a summary of the plan released by the White House.

“Rent is too high and buying a home is out of reach for too many working families and young Americans, after decades of failure to build enough homes,” Biden said in a statement. “Today, I’m sending a clear message to corporate landlords: If you raise rents more than 5% on existing units, you should lose valuable tax breaks.”

It comes after Biden prematurely hinted at the proposal at a press conference last week, where he sparked confusion in housing policy circles by mentioning plans to cap rent hikes at 5% without offering further details.

The new rent cap plan, which would require the approval of a currently divided Congress, drew swift backlash from industry groups that represent homebuilders and landlords, who argued that it would exacerbate the housing crisis by discouraging new construction of rentals.

The proposal is unlikely to pass Congress, where Republicans hold a narrow House majority, unless Biden wins reelection and his Democrats emerge with House and Senate majorities in the November elections. That’s a reality that the White House acknowledged in a statement.

“Republicans in Congress have blocked the President’s housing agenda,” the statement said. “While Republicans side with corporate landlords that are raising rents, President Biden is cracking down on price gouging and building more homes to lower rents and put homeownership in reach for working families.”

More immediately, Biden also announced plans on Tuesday to free up sections of federal land in Southern Nevada to build up to 15,000 new affordable housing units. It follows longstanding calls in the Silver State to convert some of the state’s vast federal lands, and echoes a similar proposal from Trump to use a portion of federal lands for new construction.

“What’s encouraging is that the recently announced policies of both the Biden administration and Trump campaign seem to be more similar than they are different, with both calling to open up more federally owned land for new housing supply and lowering housing costs through tax incentives,” says Realtor.com® senior economist Ralph McLaughlin.

“The primary difference is that Biden has specifically targeted the renter side of the market through caps on rent increases by landlords that utilize federal subsidies,” adds McLaughlin. “The renter side of the market is a side the Trump campaign has yet to address, and we’re eager to hear their views on the matter.”

In April, the Biden administration issued a new rule capping annual rent increases at 10% in units financed by the Low-Income Housing Tax Credit. This program incentivizes private investment in affordable housing developments. His new plan would go much further, pushing all large landlords to limit rent increases to 5% at least through 2026.

Biden’s rent cap plan draws polarized reactions

The federal government has never imposed broad nationwide restrictions on rent increases by landlords. Historically, rent control policies in the U.S. have been implemented at the state and local levels, not federally.

The new White House plan to cap rents at 5% would apply only to existing properties. It would exclude any new construction, a distinction the White House says is designed to promote the development of more sorely needed housing units.

Still, groups representing homebuilders and landlords slammed the proposal, insisting it would exacerbate a national housing shortage.

“Rent control in any form is bad for housing and President Biden’s tax plan to cap rents at 5% on existing multifamily structures will worsen the housing affordability crisis by discouraging developers from building new rental housing units at a time when the nation is experiencing a shortfall of 1.5 million housing units,” says Carl Harris, chairman of the National Association of Home Builders.

“These rent caps would also hurt existing tenants—those that the president is trying to help—because owners and developers would be unable to cover rising costs if rents are fixed,” adds Harris.

The NAHB instead called on Biden to expand the Low-Income Housing Tax Credit and to slash regulations that the homebuilders claim stall multifamily projects by adding excessive burdens and costs.

The National Apartment Association, which represents owners of multifamily properties, slammed Biden’s plan as “another attempt at failed rent control policy that will harm communities and renters across the U.S.”

“Federal rent control will only drive rental homes out of the market, decreasing housing options while increasing housing costs and placing upward pressure on inflation,” the group said in a statement. “It’s time to stop issuing policies that harm the people that are trying to house Americans.”

Even some groups focused on affordable housing were critical of Biden’s new plan.

“Rent caps don’t work and will have a chilling effect on housing supply. Exempting new construction will do nothing to change this, making clear that long term investments in housing can be made uneconomic retroactively,” said David M. Dworkin, president and CEO of the National Housing Conference, a coalition of affordable housing leaders. “It’s time to stop making policy by bumper sticker and get serious about housing production.”

Other affordable housing advocates offered cautious praise of the rent cap plan, but they argued that it does not go far enough or make full use of the tools at the administration’s disposal.

“President Biden’s proposal to temporarily cap rent hikes to prevent rent gouging is historic,” says Diane Yentel, president and CEO of the National Low Income Housing Coalition. “But rather than waiting for Congress to advance anti-rent gouging measures after the election, President Biden can and should take action now to put in place these and other critical protections for renters living in properties with federally backed mortgages, as called for by NLIHC and renters nationwide.”

The NLIHC instead is calling on Biden to implement new rules through the Federal Housing Finance Agency, which in theory could restrict rent increases in properties financed with mortgages backed by Fannie Mae or Freddie Mac, both government-sponsored enterprises.

An FHFA official told Realtor.com last week that the agency has not ruled out any new measures for tenant protections, including examining rent increases. But the person said that no decisions have been made on a timetable for future announcements and that potential changes would have to be carefully studied for any legal or other risks.

Tara Raghuveer, director of the nonprofit Tenant Union Federation, praised the concept of rent caps on social media, but called Biden’s plan a “talking point” that needed to be backed up by action.

Meanwhile, Biden is expected to tout his new housing initiatives at an economic summit in Las Vegas on Tuesday afternoon, attempting to elevate the issue in a fractious campaign season that has been rocked by his poor performance in last month’s debate as well as Saturday’s assassination attempt on Trump.

“We welcome ongoing housing-related discourse on the national stage during this election season,” says McLaughlin. “Though the policies that long have been a barrier to housing supply exist mostly at the state and local levels, the federal government does have both a symbolic and practical role to play in helping address supply issues.”

The Realtor.com economist adds that he hoped “the symbolic nature of these federal efforts helps spur further discussion of housing policy at all levels of governance.”