JUANA SUMMERS, HOST:
If you want to know about the economic mood in the U.S., take a look at housing, which can tell you a whole lot. It's been a few slow years in the housing market since mortgage rates shot up, but there are some signs and data that came out this week that things are shifting. NPR's Laurel Wamsley is here to talk about the latest. Hey there.
LAUREL WAMSLEY, BYLINE: Hey, Juana.
SUMMERS: So Laurel, the latest home sales data came out today. It's from the National Association of Realtors. What's it have to say?
WAMSLEY: Well, the headline is that sales of existing homes were up a little bit in July compared to a month earlier. But it's been such a slow last three years, and there's really just a persistent sluggishness in the market. At the current pace, there will be about 4 million existing homes sold in the U.S. this year. That's far lower than during the pandemic and significantly lower than before the pandemic, too.
SUMMERS: Well, Laurel, tell us why it's so slow.
WAMSLEY: Basically 'cause it's so expensive to buy right now. Mortgage rates remain pretty high, averaging about 6.6% for a 30-year mortgage. And then home prices have risen a lot - nearly 50% in the last five years. That means that many people who want to buy a home simply can't afford to. The one thing we're seeing now is that prices are softening in some areas. Home values are increasing at their slowest pace in two years. That's largely because there's more inventory. Juana, maybe you and others have noticed more for sale signs this year. There are 16% more listings than there were a year ago. That's certainly good news for buyers. It gives them more options and more leverage to negotiate. For sellers, it's not so good, and homes are taking longer to sell now.
SUMMERS: Now, Laurel, you mentioned mortgage rates. What's going on there?
WAMSLEY: Mortgage rates have inched down a bit in recent weeks to their lowest level since October 2024. That has spurred a jump in refinance activity, especially among those folks with mortgage rates above 7%. This has been a window to get a lower rate and shave potentially hundreds of dollars off the monthly payment. I asked Joel Kan, deputy chief economist at the Mortgage Bankers Association, about what might happen for mortgage rates in the months ahead. And he told me there are some opposing forces at play.
JOEL KAN: Our forecast is for rates to stay close to this 6.6% range, at least through the end of the year. You certainly have the expectation that if the Fed does start to cut rates, rates might come down. On the other side, you do have things like concerns around the debt and the deficit of the U.S. that is keeping rates higher.
WAMSLEY: And he also told me that anticipation of a possible Fed interest rate cut is already being factored into mortgage rates now, meaning they may not drop if and when that cut happens. He says next year they expect rates to get down to the 6.5% range, and there will likely be weeks when they dip below that. Of course, lots of people are hoping rates will come down further so they can make the math work on buying a home.
SUMMERS: Right. So have rates come down enough to make moving attractive to homeowners who locked in those really low rates that we all saw during the pandemic?
WAMSLEY: Well, the fact that there's more inventory than there has been in years is a sign that some people are moving out and giving up those low rates. But lots of people aren't. We know that many are still stuck in homes that are too small or too big, but it just doesn't make sense to sell and give up those low rates and lower monthly payments. These small declines in mortgage rates unfortunately don't really change that.
SUMMERS: Let's talk about inventory for a sec. We've been talking about a housing shortage and these sky-high prices. Any signs of that easing?
WAMSLEY: Well, data out this week from the Census Bureau shows that housing starts - that's the construction starting on homes - in July were up 5% over a month earlier. But at the same time, building permits were down compared to June. So there's a bit of a mixed picture there on where we're heading in terms of building. But there's definitely evidence that building more new homes helps bring prices down. In the South, where there are fewer restrictions on building new homes, a lot of new housing has been built in recent years. And now we see that prices are falling there compared to a year ago. That's even as a lot of people are still moving to the region. Meanwhile, in the Northeast and Midwest, where it's harder to build new homes, prices just keep rising.
SUMMERS: NPR's Laurel Wamsley, thank you.
WAMSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
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