June Market Update

The slowing trend I mentioned in late May’s market update has continued throughout the last few weeks. Buyer activity has slowed, which typically causes inventories to rise. However, we have not seen a meaningful rise in inventories because seller activity is also very slow. Rates, which have been hovering at their highest levels in 3 months, are the likely culprit for the hesitancy of both the buyers and sellers. The high rates obviously impact buyers, but they also have the same effect on sellers who have to finance their replacement homes. This explains why we see so few sellers who are moving up in our market and why so many of today’s sellers fall into one of the following three categories:

• Those moving out of state and purchasing a home with cash.
• Heirs who are selling their parent’s homes.
• Those experiencing unfortunate family circumstances such as divorce.

Currently, jumbo rates are in the mid-to-high 6% range, and the high-balance conforming loans are in the low 7% range. These are about a half percent higher than a month ago, making a significant difference in monthly payments. I was expecting some rate relief after the debt ceiling agreement was reached a couple of weeks ago and again this morning after the headline CPI number showed the lowest inflation since early 2021. Unfortunately, neither one had the expected result. The market is confident that the FED will pause its rate hikes at this month’s meeting that wraps up tomorrow. Their comments on future actions will be closely examined and could move rates in either direction. Hopefully, they will signal an end to their historic rate hikes, which could give us some relief.