Federal Reserve Chair Jerome Powell suggested at the central bank’s Jackson Hole Symposium on Friday that policy shifts may be coming, reinforcing expectations that rate cuts could arrive as early as September.
His remarks highlighted the balancing act between curbing inflation and supporting employment, a dynamic that has far-reaching effects on consumer borrowing costs.
For the housing market, those costs remain a critical pressure point. Despite recent income gains, higher mortgage rates have slashed buyer purchasing power, reshaped demand, and left builders navigating an uneven recovery.
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Even though mortgage rates are still a headwind, existing-home sales rose in July, getting just past a 4 million sales pace. Home price growth slowed, and data shows notable variation across the country.
Mortgage rates remained unchanged this week as investors digested conflicting signals on the labor market and inflation, while housing data remained fairly steady. We see more sellers, but momentum is waning and active listings continue to go up as prices remain flat.
The average 30-year fixed home loan held steady at 6.58% for the week ending Aug. 21, according to Freddie Mac.
Mortgage rate stability was likely a welcome trend for homebuyers who have seen their purchasing power erode by nearly $30,000 as mortgage rates climbed over the past few years. The recent stability gives incomes, which have continued to rise in most markets, a chance to catch up.
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In new construction, there has been an uptick in July housing starts, but both permits and completions were down on a yearly basis.
Builder confidence remains low, and incentive use is widespread. However, builders reported a modest uptick in buyer traffic, and a Realtor.com® study showed greater buyer engagement in some markets that contributed to homebuilding and other metrics to our Top New-Construction Metros ranking.
These top metros are overwhelmingly found in the South, but every region is represented by at least one market. Seven of the top 10 metros for new construction are in the South, including the overall No. 1, Fayetteville, AR.
New-construction activity has been heavily concentrated in the South for several years, leading to higher volumes of newly built homes at more competitive prices, which we track quarterly in the Realtor.com New-Construction Insights report.
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One challenge facing builders is buyer purchasing power. A Realtor.com study found that despite significant income growth, higher mortgage rates have erased nearly $30,000 in home purchasing power for the typical income household in the past six years. There are a few markets that bucked this trend, where incomes have grown enough to offset the impact of higher mortgage rates.
Finally, have you ever wondered where the nation’s priciest homes are? America’s most expensive ZIP codes are found in coastal markets in California and New York, and also where the No. 1 priciest ZIP code is: Fisher Island in Miami. The median list price there in July reached $11.9 million, more than 27 times the U.S. median.
Nationally, the top 5% of homes list for around $5.5 million, and just under 14% of active listings are priced above $1 million.