The housing market shift has begun

It’s?Friday May 27, and if you’ve been following real estate news for the past few months, you’ve probably seen mention of a?shift in the housing market. Today, Inman reporter Jim Dalrymple II digs into what’s happening, reporting that a housing market shift has indeed begun —?but that it may not be as scary as you think. Straight up, this story?is a must-read before you kick off your Memorial Day Weekend.

The shift has begun — but rate hikes won’t be real estate’s Achilles’ heel

THE NEWS:?The?housing market is on the cusp of an “inflection point”?right now. That at least, is the takeaway from multiple recent?reports?as well as conversations Inman had with industry economists. And it’s an inflection point that will impact prices, supply, demand and the lives of agents and consumers alike.?It’s a big deal.?

But there are two parts to this shift. First, the freewheeling bonanza of the past two years that was fueled, in part, by cheap money is ebbing, and the scales may tip at least slightly more toward buyers. But second, and significantly, a shift is not a collapse. Though?rising mortgage rates?are cooling the market, the high rates of the 1980s and 1990s aren’t on their way back, nor is a collapse imminent thanks to the more modest hikes that are taking place. Rates, in other words, are the big driver of this story, but in the end shouldn’t become an Achilles’ heel for real estate going forward.

BEHIND THE NEWS:?The evidence of a shift has been mounting for months, but suddenly feels like it’s everywhere now. Just days ago, for instance,?Fannie Mae reported?that both homebuilding and home sales are headed for a slowdown. Despite the hopes of sidelined would-be homeowners, no one who spoke to Inman for this story envisions any major price drops in the near future. In other words, while the?rate?of price appreciation is widely expected to slow, that doesn’t mean it’ll go in reverse.?Read the full story here.

>> NUMBER OF THE DAY:?120?companies embroiled in?fair housing market sting in New York City <<

Mortgage rates fall to 5.10% in biggest drop since 2020

THE NEWS:?Mortgage rates?decreased for the second week in a row, as the U.S. economy faces multiple headwinds and the housing market shows signs of slowing for the first time in years. Since hitting a 2022 peak of 5.30 percent during the week ending May 12, rates on 30-year fixed-rate mortgages have fallen by 20 basis points, averaging 5.10 percent during the week ending May 26, according to a weekly survey of lenders by?Freddie Mac.

That’s the most dramatic two-week drop in rates in Freddie Mac’s survey since April 2020, when the beginning of the pandemic turned the economy on its head.?

BEHIND THE NEWS:?The drop in mortgage rates comes just as the red hot housing market was showing signs of undergoing a shift, with sales of new homes?charting a two-year low?this week, dropping 16.6 percent month-over-month and marking the fourth straight month of declines. Existing homes, meanwhile, have charted sales declines for?three consecutive months,?a period that saw mortgage rates rise 2.4 percent.

?The decline should be welcome news for homebuyers and the housing market, experts said, and could help prevent homebuilders from pulling back and exacerbating the existing housing shortage. Read the full story here.