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Mortgage rates are down half a percentage point from 2024 highs, but applications for purchase loans dropped last week for the second week in a row as rising home prices continue to shut many would-be homebuyers out of the market.

A weekly survey of lenders by the Mortgage Bankers Association (MBA) showed requests for purchase loans fell by a seasonally adjusted 4 percent last week when compared to the week before, and were down 15 percent from a year ago.

Joel Kan

“Mortgage rates continued to ease, with the 30-year fixed rate dipping to 6.82 percent, the lowest level since February 2024,” said MBA Chief Economist Joel Kan, in a statement. “Purchase applications decreased as ongoing affordability challenges persist with rates at their current levels and with home-price appreciation still strong in many markets.”

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Applications to refinance existing mortgages were essentially unchanged from week to week but up 38 percent from a year ago. Refi applications accounted for 39.7 percent of all mortgage requests.

Mortgage rates continue to ease

Rates for 30-year fixed-rate conforming mortgages averaged 6.77 percent Tuesday, down half a percentage point from a 2024 high of 7.27 percent registered on April 25, according to rate lock data tracked by Optimal Blue.

Rates remain stubbornly above 7 percent for borrowers seeking jumbo mortgages that exceed Fannie Mae and Freddie Mac’s $766,550 conforming loan limit, thanks in part to the growing “spread” between jumbo and conforming loans.

In addition, home prices have shown surprising resilience as mortgage rates climbed from below 3 percent in early 2021 to above 7 percent last year.

The National Association of Realtors reported Tuesday that the median sales price for existing homes was up 4.1 percent in June from a year ago to an all-time high of $462,900. Sales also slipped 5.4 percent to a seasonally adjusted annual rate of 3.89 million.

Oliver Allen

“A sharp fall in June sales always looked likely given the further decline in pending home sales in May — they lead existing sales by about a month — and rock-bottom levels of mortgage demand,” Pantheon Macroeconomics’ Senior U.S. Economist Oliver Allen said in a note to clients.

The 1.32 million homes on the market at the end of June represented 4.1 months’ supply at the current monthly sales pace, NAR said, up from 3.1 months a year ago.

“But that improvement mostly reflects lower sales — this year was the weakest June since 1995 — rather than many more homes coming onto the market,” Allen said.

Economists at Fannie Mae and the Mortgage Bankers Association predict national home price appreciation will cool by half to around 3 percent by the final quarter of 2025, which implies that home prices will come down in some markets where supply exceeds demand.

Realtor.com data shows active for-sale listings were up 37 percent in June from a year ago, but the pace of sales remains subdued as the housing market continues to wait for affordability to improve, Fannie Mae Chief Economist Doug Duncan said Tuesday.

For would-be homebuyers in Sunbelt markets, relief could come in the form of lower prices if listings continue to come on the market faster than buyers snatch them up.

Zillow data shows that although home prices continued to appreciate in 46 of the 50 largest metro areas in June, home values were down from a year ago in four Sunbelt metros: New Orleans (-6 percent); Austin, Texas (-4.6 percent); San Antonio, Texas (-2.7 percent); and Birmingham, Alabama (-0.6 percent).

Homebuyers in many parts of the Northeast and Midwest, where inventory remains tight, might need to see mortgage rates come down some more before they’re ready to get off the fence, forecasters say.

Mortgage rates projected to ease

Source: Fannie Mae and Mortgage Bankers Association forecasts, July 2024.  

Fannie Mae economists project rates on 30-year fixed-rate mortgages will decline to an average of 6.7 percent during Q4 2024 and to 6.2 percent by Q4 2025. The MBA envisions rates coming down a little faster, to an average of 6.6 percent in Q4 2024 and 6.0 percent during Q4 2025.

Fannie Mae economists expect the Federal Reserve to cut rates in September and December, following two consecutive lower-than-expected prints of the Consumer Price Index and signs that job growth is slowing.

Because the Federal Reserve typically telegraphs its moves in advance, futures markets tracked by the CME FedWatch Tool on Wednesday predicted only a 7 percent chance that central bank policymakers will cut rates at their next meeting, which wraps up on July 31.

But futures markets investors have priced in a 100 percent chance that the Fed will bring short-term rates down by at least 25 basis points on Sept. 18, and an 8 percent chance of a 50 basis-point cut. A basis point is one-hundredth of a percentage point.

Futures markets tracked by the CME FedWatch Tool on Wednesday were predicting the odds of at least three rate cuts totaling 75 basis points by the end of the year at 59 percent, up from 23 percent on June 24.

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At Inman Connect Las Vegas, July 30-Aug. 1, 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.

Among other uses, Restb.ai’s computer vision models are powering a new way for consumers to find homes and speeding up the pace at which appraisers greenlight mortgages.

Now Inman has learned it’s putting its AI wisdom to use to document how very specific marketing assets overlap with a home’s ability to sell, and it appears all those terribly staged images of agents pointing at floor plans may finally have their place in your marketing arsenal.

The Restb.ai Special Report series will be a semi-annual breakdown of what the company has learned from reading millions of property photos submitted to its many multiple listing partners. The first examines how the existence of a floor plan impacts days on market (DOM). Do consumers consider them valuable before listing a listing? Yes, according to a July 24 press release.

One hundred thousand photos were used to generate the first report. Listing pages were read between May 1, 2023, and April 30, 2024, across 10 markets, including major cities like Chicago, Phoenix and Houston and mid-size markets like Portland, Oregon, and Grand Rapids, Michigan, the release said. The diversity was key to ensuring the data captured by the AI represented a healthy cross-section of how floor plans influence real estate sales activity.

Results confirmed surface-level conclusions — Chicago had the highest number of floor plans included with listings, St. Louis the least — and that their use is growing. More compelling findings showed that agents who use a floor plan will sell their client’s home in less time, especially in St. Louis, where using one cut DOM by 41 percent. In Chicago, DOM went from an average of 11.3 days to 8.5.

The city of Portland cut its use of floor plans in the time studied, but still, those listing agents who encouraged their use sold a home almost two days faster, on average. The outlier was Las Vegas, where using a floor plan increased DOM by 2 percent. Apparently, buyers there would rather not know how a home is designed.

Restb.ai was the first software provider to sign its initials on the new foundation curing under the real estate industry, a hardening mix of artificial intelligence and quickly evolving machine learning solutions. The company’s AI quickly scans and “reads” still images to learn their contents, which can be translated into actionable data when processed at scale.

In an interview with Inman in 2023, the company’s Chief Product Officer Nathan Brannen said they learned that twilight edits on exterior photos result in fewer days on market.

“We did do a study on overcast photos, is it dusk, or if it’s snowy, and studied the impact on price. We found that photos taken in overcast conditions were on the market for an average of 12 days longer. So, those companies doing sky-replacement edits … it’s worth it.”

On its new floor plan revelations, Brannen made sure to note that they vary by market, as the data shows.

“Our study highlights how floor plans can enhance the appeal of a listing, but their impact varies based on specific market dynamics. Integrating floor plans into property listings can be a crucial decision for selling agents, offering a competitive edge in markets with a high presence of floor plans,” he said.

On a broader scale, the data showed a steady volume of floor plans can lift an entire market. Markets with at least 10 percent of listings containing floor plans showed an average reduction of 1.4 days in DOM, equating to an 18 percent decrease, the study showed.

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This report was originally published on July 15, 2024, exclusively for subscribers of Intel, the data and research arm of Inman. Subscribe to Inman Intel for a deeper analysis of the business of real estate.

Imagine the housing market as a grocery store.

In this metaphor, the pickings have been slim, the shelves poorly stocked for the last few years. It was the real estate version of a stereotypical Soviet supermarket — which is pretty depressing.

But lately, something has started to change.

“What we’re seeing is the supermarket shelves are starting to get restocked,” Realtor.com Senior Economist Ralph McLaughlin recently told Intel. “They’re not fully stocked like they were before the pandemic, but they’re on their way.”

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In other words, the housing inventory situation in the U.S. is improving. This is good news. But for a variety of reasons, the market is actually complicated. So far, 2024 has hardly been a boom time.

To better understand what’s going on, Intel spoke to economists and polled hundreds of agents and brokerage leaders in late June as part of the Inman Intel Index survey.

The takeaway from these efforts is something of a two-edged sword: On the one hand, there’s more inventory on the market now than there was a year ago. But on the other, inventory is still far below pre-pandemic levels and demand remains suppressed.

The result is that agents have become heavily dependent on their existing spheres to cope with a market that’s still characterized by challenges.

Inventory is improving

Experts who spoke to Intel for this story agreed that overall inventory is improving.

• Redfin Chief Economist Daryl Fairweather recently told Intel that “inventory is the highest it’s been this time of year in at least the last four years.” She added that “we’re around three months of inventory.”
• McLaughlin said that inventory has improved most significantly in the South, where homebuilding has been strongest. “The supermarkets there are close to fully stocked compared to pre-pandemic levels, and their inventory is fairly priced,” he said.

But the trend of improving inventory is not limited to just the South.

• Altos Research founder and President Mike Simonsen told Intel that “available inventory of unsold homes is climbing pretty much everywhere across the country. Every state has more inventory now than last year at this time.”

The numbers bear this out, with data showing active listings steadily climbing.

Credit: Realtor.com data, visualized by Intel

• Realtor.com data shows that the number of active homes for sale was up 37 percent year over year in June. At the same time, homesellers listed 6 percent more homes in June compared to May. The search portals June housing trends report ultimately concludes that the “market stabilized as mortgage rates also stabilized in June.”
• Data from Realtor.com shows that the upward trend has been occurring over an even longer period. The number of active listings has risen rapidly to 839,992 in June, which is 70 percent more than were on the market in the same month in 2021.
• Data from the National Association of Realtors paints a similar picture, revealing that as of May there were 3.7 months of inventory in the U.S. housing market. That’s up from a low of about 1.6 months of inventory at the beginning of 2022.

So if there are more homes on the market, where’s the revenue?

Looking just at months of inventory or active listings might give the impression that after years of sluggishness, the U.S. housing market has come roaring back to life. The proverbial supermarket appears to be restocked and ready to go.

But anyone working in real estate knows it’s not that simple. And part of what’s going on has to do with why active listings are actually on the rise.

• Fairweather explained that new listings are up compared to 2023, but “only by 10 percent.” They’re also still lower than they were in 2021 and 2022. In other words, inventory isn’t rising because a lot of new homes are hitting the market. “It’s more that the homes that are hitting the market are staying on the market longer and we’re seeing them starting to sell for under list price,” Fairweather explained.

Credit: Realtor.com data, visualized by Intel

What this means is that inventory is rising less in response to new supply (though that is happening, slowly) and more in response to weak demand.

• “As mortgage rates moved higher, that has led to a demand slowdown that allows inventory to build,” Simonsen said. He added that other factors tamping down demand include fewer people changing jobs and thus relocating, and fewer new jobs being created. “With the employment numbers, there aren’t very many layoffs but there’s also not very many hires.”
• Optimal Blue data shows that average rates on a 30-year, fixed-rate mortgage peaked last fall at just under 8 percent, but have since fallen into the high 6 percent range — figures that explain both the modest uptick in new listings but also anemic demand. Loans remain expensive for many consumers, so homes sit on the market and inventory rises.
• On top of all of this, inventory may be rising, but Realtor.com data shows active listings in June were still about 23 percent below where they were during the average June from 2017-2019, right before the pandemic. So housing supply remains tight by historical standards.

The picture that emerges is one of an improving inventory situation where buyers may have an easier time finding homes they like, but where they still struggle to buy those homes due to high costs.

The situation also offers a stark contract to the pandemic years; inventory was also a problem then, but in that case it was because demand was high and outpaced supply growth.

So what are agents and brokers doing about all of this?

Respondents to Inman Intel Index survey in June do seem to be feeling the effects of a market that continues to struggle with a balance of supply and demand.

• Among agent respondents to the survey, 27 percent said their pipelines are “substantially lighter” than they were one year ago. Another 30 percent described pipelines as being merely “lighter” — meaning well over half of agents have experienced a weakening pipeline over the last year.
• In total, 24 percent of agent respondents pointed to lack of inventory as their top concern right now. That tied with commission compression for the second largest concern among agents. Mortgage rates — which have a strong relationship to inventory — were the most common top concern, garnering 29 percent of agent responses.
• Among brokers who took the survey, about 19 percent cited inventory as their top concern — second only to commission lawsuits in first place with 25 percent.
• In a similar vein, of more than 6,000 Realtors surveyed for last week’s NAR 2024 Member Profile, 26 percent pointed to inventory as one of two top issues holding their clients back. Only affordability, which like rates is deeply connected to inventory, ranked as highly as a client stumbling block.

The point is that agents are feeling the challenges — high rates, low demand, and still-low inventory — that are baked into the current market. And the survey shows that the most common response appears to be agents doubling down on their spheres:

• More than a quarter of agent respondents to the survey, or 28 percent, indicated that “almost all” of their recent listings came from repeat clients. That eclipsed all other responses to the question.
• Another 15 percent indicated that more than 75 percent of their listings came from repeat clients, while 23 percent revealed that between half and three quarters of their listings came from returning customers. All together, that means nearly two-thirds of agents are getting half or more of their listings from repeat clients.
• When brokers were asked what their agents should do to find new listings, a plurality of respondents, or 28 percent, selected “other” and then provided free response answers, many of which focused on sphere-building:
  • “Staying in touch with previous clients”
  • “Reaching out to sphere about existing equity in home”
  • “Referrals and repeats”
• A significant share of broker respondents also said their agents should focus on social media or SEO, at 25 percent, followed by direct mailers at 18 percent.

The thesis that emerges is that in a still-sluggish market, agents and brokers alike see industry professionals’ existing contacts as better resources than an array of other activities such as open houses, paid ads, or buying leads — all activities that garnered fewer responses in the survey.

The survey also offers a ray of hope, which is possibly a response to the numbers at the top of this story showing that inventory at least is getting better.

• A plurality of agent respondents to the survey, or 43 percent, said they believe their listing pipelines will be about the same in a year compared to now.
• Another 35 percent believe their listingpipelines will be heavier in a year. Meanwhile, only 22 percent think their pipeline will be lighter.
• All of which is to say, agents believe the future will be at least as good as the present — and plenty think it’ll be even better.

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At Inman Connect Las Vegas, July 30-Aug. 1 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.

As the cost of owning a home has continued to rise, properties are sitting on the market longer, waiting for a willing buyer.

Almost two-thirds (64.7 percent) of homes that were for sale in June had been listed for at least 30 days without going under contract, Redfin reported on Wednesday. That figure is up from 59.6 percent the previous year, representing the largest annual increase in the last year and the highest share of any June since 2020.

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The month also marked the fourth consecutive one in which the share of homes that had been on the market for at least one month increased on an annual basis.

Record home prices and higher mortgage rates are dissuading buyers, even though inventory is more robust than in recent years. In June, the total number of homes for sale posted its largest year-over-year gain on record because many listings are sitting on the market.

“Overall, the market is fairly stagnant,” Shay Stein, a Redfin Premier agent in Las Vegas, said in Redfin’s report.

“There are more listings hitting the market, but a lot of them aren’t in good condition or they’re not in a desirable neighborhood — and sellers are pricing unrealistically high. A lot of sellers are willing to let their home sit on the market until they get the price they want, and a lot of buyers aren’t willing to pay sky-high prices when mortgage rates are still high. My advice to serious sellers is to price fairly and make cosmetic repairs before listing.”

Properties that are move-in ready, relatively affordable and in good neighborhoods — as well as luxury homes that are priced well — are still moving quickly, Stein added.

Florida and Texas are seeing the largest rise in unsold inventory, Redfin reported, largely due to greater housing construction compared to other parts of the country. New homes are being built as demand dwindles, leading to higher levels of inventory.

Dallas saw the largest increase in stale inventory, with 63 percent of listings sitting on the market for at least 30 days in June, up 52 percent year over year. Meanwhile, in Tampa, 70 percent of homes for sale had been listed for at least 30 days, up from 60 percent in June 2023. In Fort Lauderdale, the portion of homes that had been sitting on the market for at least a month was 77 percent, up from 68 percent the previous year, while in Jacksonville, that figure was 70 percent, up from 61 percent the year prior. In Orlando, 69 percent of homes for sale had been listed for one month, up from 60 percent in June 2023.

The share of stale home listings grew on an annual basis in 44 out of the 50 most populous U.S. metro areas. The share of stale listings declined on an annual basis in five metros, but only by a small portion (2 percent or less): Nassau County, New York; New York, New York; Las Vegas, Nevada; Newark, New Jersey; and Warren, Michigan.

Meanwhile, 42.6 percent of homes on the market in June had been listing for at least 60 days without going under contract, up from 38.4 percent the previous year. That increase represented the largest such annual increase in almost one year. June also marked the third month in a row in which the portion of homes sitting on the market for at least two months has increased.

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Part of Local Logic’s growth strategy has been to partner with like-minded technology providers and its latest move is no different, Inman has learned.

The company that provides data resources and tactical marketing tools to help agents become location experts has partnered with iGo, a digital home inspection and home management company, according to a July 24 press release. The partnership is a clever choice for Local Logic, as it gets no more location-specific in real estate than under the crawl space of a home about to sell.

Part of the relationship involves Local Logic providing iGo with a site license for NeighborhoodIntel, a recently released property reporting product that generates insights from more can 250 data points per home.

“IGo provides technology and services to home inspection companies, including HomeBinder, a system powered by home inspection data that helps home purchasers more easily manage moving and maintaining their homes with a personalized experience,” the release stated.

In 2023, iGo closed on more than $5.5 million in Series A funding and promptly acquired two industry software providers, HomeBinder and Repair Pricer, Inman reported.

HomeBinder is focused on helping people move, integrating a home’s physical characteristics and inspection data to help home purchasers more easily manage moving and maintaining their homes. It was reviewed by Inman in 2022 and noted for its Home Seller report, easy connection to local vendors, and ability to collect all of the closing documents and requisite loan data shortly after closing.

Vincent-Charles Hodder, co-founder and CEO of Local Logic, said in the press release that his company’s offerings overlap intuitively with iGo’s offer to the industry.

“Collaboration with iGo underscores our commitment to leveraging location intelligence to improve real estate transactions,” Hodder said. “By integrating NeighborhoodIntel into iGo’s services, we are equipping homebuyers with critical information to make more informed decisions about where they live.”

Local Logic has relationships in place on multiple industry fronts, including with MLS software provider VestaPlus, HomeGenius and, as of last month, AI disability resource Lundy.

“We are relentless about delivering an amazing consumer experience,” said John Russell, chief executive officer and co-founder of iGo, in a statement on the partnership. “By including NeighborhoodIntel reports with HomeBinder, we are able to provide homebuyers with unparalleled insights into their potential new neighborhoods, significantly enhancing their home buying experience.”

Local Logic landed $13 million in a Series B round in 2023, money that the company said will put toward general operations and services expansion to help the space “better understand the impact of location,” according to the announcement.

Email Craig C. Rowe