Sales of existing homes were flat in August, according to data out Thursday from the National Association of Realtors.
The housing market continues to be stuck, with both prices and mortgage rates high. Rates have been falling, it’s just still a little early to see whether they’ve come down enough to get more would-be buyers off the sidelines.
Most people who closed on a house in August likely went under contract in June or July, when mortgage rates were still closer to 7%.
“So, we shouldn’t have expected to see much of an impact of falling mortgage rates in this particular report,” said Lisa Sturtevant, chief economist at Bright MLS.
Even now that rates are down closer to 6%, she said, the market still feels slow.
“We haven’t seen whether there’s going to be an impact of mortgage rates, and frankly, I think the jury’s still out on whether that’ll be a big boon to the market this fall,” she said.
The recent drop in rates has been enough to shave about $150 off the monthly mortgage payment for a median-priced house, Sturtevant said, which is not nothing.
“The problem is, though, we’ve been seeing that drop in rates while we’re also seeing home prices continue to rise. So we’ve actually seen the fact that home prices are still rising offset any benefit of those declining rates,” she said.
Affordability is still a big issue.
Chris Salviati, chief economist at Apartment List, said that’s especially true for first-time buyers.
“The median monthly mortgage payment has basically doubled in five years. And so you know that’s going to really take some time for folks to be able to get into a market where prices are that high,” he said.
Mortgage rates coming down is a big factor, Salviati said — but not the only one.
“This is coming at a moment where the labor market is looking a little bit shakier than it has in a little bit here, and so that’s kind of a factor that’s going to push in the opposite direction here,” he said.
If people don’t feel secure in their job, they’re going to be more hesitant to make the biggest purchase of their lives, Salviati said.
Still, Lawrence Yun, chief economist at the National Association of Realtors, said mortgage rates do have a way of overcoming people’s jitters — if they fall enough.
“The unemployment rate is still at under 5% which is implying that 95% of the labor force still has a job, and they respond to lower mortgage rates,” he said.
So if rates stay about where they are or fall a little more, Yun is expecting to see home sales increase in the coming months.
