Later this week, we’re going to learn how many existing homes were sold in July.
Demand for homes can also tell us about demand for mortgages. Mortgage rates have been ticking down in recent weeks from about 6.8% a month ago for a 30-year fixed to around 6.6% today.
But that hasn’t caused demand for home loans to surge. Mortgage rates have come down, but not that much.
“You know, that’s not a game changer for the majority of people in the housing market,” said Mark Fleming, chief economist with First American.
The vast majority of homeowners are sitting on mortgages with rates well below where they are right now, he said. “And that means that most of them will still experience the ‘lock-in effect’ or the financial penalty if they were to move.”
Fleming added that anyone who does buy a home is going to do so because of a life event, like landing a new job. But job creation has been slowing down over the last few months.
“You know, as we’ve transitioned from a generally strong labor market to one that’s more weak, I think that’s causing some folks to kind of rethink home purchases,” said Charlie Dougherty, senior economist with Wells Fargo.
Meanwhile, housing prices are still out of reach for many people because there aren’t many houses for sale.
Chris Duncan, senior loan officer at La Salle State Bank in Illinois, said home construction in his market has slowed to a crawl.
“Any inventory that does become available, properties are selling at extraordinarily high prices,” he said.
Mortgage demand at La Salle State Bank is slightly higher than it was last year, Duncan added — but it’s still below where it was before the pandemic.