More homes have been listed for sale in the U.S.’s priciest markets like Seattle and Silicon Valley as mortgage rates start to trend lower.
The median U.S. home sale price is near record highs, partly because of the low supply of properties on the market. In June, the median home sale price hit an all-time high at $426,900.
The number of new homes for sale rose 4.2 percent in September, according to data from Realtor.com, a real estate listing website. This spike was the biggest annual increase since the peak of the spring homebuying season. Active listings were 34 percent higher in September than the year prior, according to the data.
The priciest markets, including metropolitan areas around Seattle, San Jose and Washington D.C., contributed to much of the jump in newly listed homes in September, according to Realtor.com.
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Mortgage rates were given a path to generally lower after the Federal Reserve cut interest rates last month for the first time in over four years. The interest rate, which was at a 23-year high, came down by a large half-percentage point to between 4.75 to 5 percent.
The Fed raised its benchmark rate, known as the federal funds rate, 11 times in 2022 and 2023 to curb high inflation, which hit both the United States and countries around the world after the COVID-19 pandemic.
The federal funds rate is the target interest rate at which commercial banks borrow and lend their extra reserves to one another overnight. While the Fed doesn’t control mortgage rates, if the federal funds rate continues to decrease, the cost of consumer borrowing—including mortgages, auto loans and credit cards—should go down over time.
Mortgage rates did increase to 6.32 percent this week, but economists still think rates will cool in the coming months, which could lead to more property listings.
“Sellers, especially those who are locked into a low rate, have been waiting for market conditions to change,” Danielle Hale, chief economist at Realtor.com, said to The Associated Press. “Now that we’re seeing mortgage rates down to their lowest levels in two years, there are signs of movement, with more sellers putting homes on the market, even in what’s typically a real estate shoulder season.”
Hale predicts the average rate on a 30-year home loan will remain around 6 percent until the end of the year. This is lower than a year ago when the average rate hit a 23-year high of 7.79 percent, according to Freddie Mac, a mortgage buyer.
This article includes reporting from The Associated Press.
