Market Update for June 2023

Is it going to be another head-scratching summer in the real estate market? Those who have been following the market for the past 24 to 36 months are no strangers to contradictions and two-sided trends. The big piece of news based on market data from May 2023 is that inventory just can’t seem to hold on. However, the inventory issue is quite a bit more nuanced this summer compared to the same time last year. Keep reading to get the scoop on inventory, interest rates, and other trends affecting the home market during what might be 2023’s coldest hot month ever!

Market Inventory for June 2023

Looking at May reports from Realtor.com, it’s obvious that inventory is up from last year. In fact, there were 21.5% more homes for sale this May compared to last May. It works out to more than 100,000 extra homes for sale on any given day. Does that mean that buyers can finally feel the balance of power shifting back in their direction?

While inventory is up on a year-over-year basis, there’s a simultaneous inventory decline happening on a month-to-month basis. Inventory growth for homes that are actively for sale has slowed down for the third month in a row. Another thing to keep perspective on is that the year-over-year rise doesn’t change the fact that there are far fewer homes for sale today than there were in nearly all the years prior to the pandemic real estate rush.

Existing Home Sales

The National Association of REALTORS® (NAR) shares that home sales rose 0.2% in May 2023. While all four U.S. regions experienced year-over-year declines, the Northeast and Midwest experienced slightly larger pullbacks compared to the South and West.

Homes for Sale in June 2023

In inventory news, the number of homes actively for sale increased by 21.5% compared to this time during 2022. However, the fact that home sellers actually listed 22.7% fewer newly listed homes for sale compared to this time last year shows that seller reluctance is still a factor in low inventory. The number of unsold homes with under-contract status included decreased 0.2% in May of 2023 compared to last year.

Home Prices in June 2023

Don’t count on seeing a big market dip just yet. While people have been speculating that home prices would be ready to tumble at any minute, market data from May proves naysayers wrong by showing that the median price of homes for sale increased 0.9% annually. While that’s lower than April’s growth rate, it’s still far from what anyone would call a “crash.” According to NAR data, the current median home price based on May 2023 data is $396,100.

Time on the Market

Homes were spending an average of 29 days on the market this time last year. In May of 2023, that crept up significantly to 43 days on the market. Those extra 14 days represent a potential change in the dynamic between buyers and sellers compared to the past two summers of bidding wars and waivers being the norm. However, it’s important to note that the 43-day average is still considered quite short compared to pre-pandemic average time on the market.

Where Prices Are Rising and Falling

Interestingly, there is some “micro” cooling and heating occurring in different parts of the country. Northeastern metro areas are currently experiencing growth rates in prices for active listings. Surprisingly, Harford saw a year-over-year increase of 17.2%. Rochester is having a “mini boom” with year-over-year prices rising 19.2%. Meanwhile, some Southern metros saw big dips in May. Year-over-year declines of 7.3% in Austin, 5.9% in Houston, and 5.9% in San Antonio may be signaling that the great migration to Southern cities is cooling.

Interest Rates in June 2023

As of the third week of June, the interest rate for a 30-year mortgage is 6.67%. While this is a slide from last month’s rate, it’s still elevated compared to the start of 2023. Analysts are mixed on whether or not the interest rate will hit 7% before the summer buying season ends. Analysts at Freddie Mac expect rates to gently decline over the course of 2023 as inflation decelerates. While Bank of America analysts predict that mortgage rates will fall to 5.25% by the end of the year, forecasters at the National Association of REALTORS® (NAR) believe that rates won’t fall below 6% until 2024.

Final Analysis

Those who have been waiting it out until homes became more affordable are simply going to have to keep waiting. Home costs haven’t come down for May of 2023. A combination of steadily high prices, high-interest rates, and tight inventories will continue to keep prices elevated for the foreseeable future. While listing prices are stalling slightly, any gains made for buyers will be quickly eaten up by the higher inter