Mortgage rates remained roughly flat near 5.1% this week after falling for the last two weeks. Even though rates are still historically low, they are significantly higher than a year earlier. As a result, home buyers need to earn about $30,000 more if they want to buy the typical home now compared to a year ago.
While people need to spend more of their budget on housing to buy a home, the housing market shows signs of cooling. Existing-home sales have dropped for the last three months while pending contracts have continued to fall for the last six months. These headline figures are the seasonally adjusted estimates that are reported in the news. Thus, these are not the actual number of sales but the number of sales after adjusting for seasonality.
Nevertheless, the raw count of sales (not seasonally adjusted) tells a similar story. Although home sales improved in April compared to the previous month, growth slowed down to 2%. By contrast, home sales typically advance by 11% in April. As a result, home sales activity is back to the pre-pandemic average level with about 900,000 homes sold during March and April, the first two months of the spring season.