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FALLING RATES, PRICE CUTS OFFER RELIEF TO HOMEBUYERS As the summer home-shopping season approaches, buyers are finding some short-term relief. While still higher than the historic lows many buyers long for, mortgage rates have seen a dip for multiple weeks.
However, due to the Federal Reserve's ongoing efforts to combat inflation, mortgage rates aren't likely to continue to fall in the near future. "Significant drops in mortgage rates are necessary to encourage more sellers to re-enter the market," Realtor.com Economist Jiayi Xu noted, adding that many buyers remain hesitant to jump back in. Xu also highlighted that despite potential benefits from lower inflation and mortgage rates, today's buyers will still face relatively high borrowing costs. "It's important to recognize that mortgage rates are likely to remain well above the 3.5% to 5% range that prevailed in the decade before the pandemic," Xu said. PRICE CUTS AND RISING HOME PRICES In a mixed report, Redfin revealed that homes are staying on the market longer than a year ago, with price cuts at their highest level since November 2022. This could encourage some buyers to make offers. However, rising home prices offset the increase in price cuts. The median home sale price has risen nearly 5% year-over-year to $396,000, an all-time high. For buyers who can afford these prices, there are more options available, with active listings up 16.5% compared to last year. While current mortgage rates provide some relief, high borrowing costs and rising home prices present challenges. Buyers must navigate these conditions carefully to find their ideal home.
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