Mortgage Rates Spike Close to 7%—Yet Buyers Are Doing Something Extraordinary

Welcome to the official dog days of summer—and of the real estate market.

Mortgage rates have risen yet again. For the week ending Aug. 3, the average 30-year fixed mortgage rate jumped to 6.9%, up from the previous week’s 6.81%, according to Freddie Mac. (Last year, at this time, rates hovered at a much friendlier 4.99%.)

And to pile onto that oppressive statistic, median home listing prices rose for the week ending July 29 compared with this same week last year.

So, despite some flickers of economic good news—namely, gross domestic product and payroll numbers were up—”The housing market is far from fully healed,” says Danielle Hale, chief economist for Realtor.com® in her analysis of the latest housing data. “Home sales are still on target for their lowest annual tally in more than a decade in 2023, and the market has no slack, with homeowner vacancy hitting a new record low.”

Yet those lows are not stopping some intrepid home shoppers from making offers—and the competition might even be heating up.

What does that mean for homebuyers and sellers? We break down the latest real estate statistics in our new installment of “How’s the Housing Market This Week?”

Home prices creep upward

As of late, nothing gold can stay in the housing market.

The entire month of July saw a welcome dip in home price growth with a median listing price of $440,000—a figure that was down 0.9% (from $443,900) from the same time last year.

But after seven welcome weeks that saw median home prices at or below levels from last year, they rose by 0.2% year over year for the week ending July 29.

And while no homebuyer wants to see listing prices head north, the rise is not quite something to induce the panic that came with last year’s record-breaking home prices—yet.

“Our prediction that we will not see a new peak home price in 2023, above the June 2022 record of $449,000, seems likely to hold,” explained Hale.

New listings continue to free-fall

New listings have been waning for so long—56 weeks now—that homebuyers might now be accustomed to stale inventory.

Fresh listings just hitting the market tumbled 17% for the week ending July 29 compared with last year. And active inventory (a combination of both old and new listings) also took a dip, with the total number of homes for sale behind last year’s levels by 9%.

“This week marks a sixth consecutive decline in the number of homes actively for sale compared to the prior year, and the gap is growing,” says Hale.

In terms of inventory levels, she continues, “We expect a dip of 5% for 2023 overall compared to 2022.”

The pace of home sales may be reaching a ‘new normal’

Skimpy listings at steep prices have also slowed the pace at which homebuyers are snapping them up: For the week ending July 29, homes spent eight more days on the market compared with this same week last year. Median days on the market has been increasing for 54 weeks straight.

Yet despite all this, Hale points out that many homebuyers are extraordinarily undeterred. The data suggests “home shoppers are looking.”

The upshot is that this more languorous pace of sales (which, by the way, is still shorter than before COVID-19) might not last for much longer.

“As we lap the 2022 housing slowdown period, this gap is likely to continue to shrink, and by fall we could even see homes selling faster than one year ago,” notes Hale. “If this happens, it could indicate that the market is finding a new normal, where homes sit on the market for fewer days than pre-pandemic, but longer than was common during the height of the real estate frenzy.”

And eager buyers looking for a workaround for the dusty listings can always turn to new construction.

“New-home sales continue to climb from year-ago lows,” says Hale.

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