A townhouse for sale in the Upper East Side of New York.
Adam Jeffery | CNBC
Some of the heat comes from home prices, even though they are still higher than a year ago.
Several new reports show that price increases are easing and home sellers are starting to relent after a stagnant spring market.
For the first time since the start of the Covid-19 pandemic, when home sales ground to a halt, the typical home sold for just under asking price — down 0.3% — during the four weeks ending June 23, according to real estate brokerage Redfin. A year ago, at the time, the typical home sold for near list price. Two years ago, it sold for about 2% above list price.
That does not mean that the housing market will collapse. Just under two-thirds of homes were still sold above asking price in the past month; however, that's the lowest share since June 2020. While most sellers are still listing their homes at higher prices than comparable homes sold a year ago, some admit they simply can't command those prices.
Mortgage rates remain stubbornly high, with the average rate on the 30-year mortgage stuck just above 7% for the third month in a row, according to Mortgage News Daily.
The much-discussed S&P Case-Shiller index showed that house prices increased by 6.3% in April compared to April 2023. May prices continued that trend. House prices are now 47% higher than at the start of 2020, with the average sales price now five times the average household income.
CNBC got an exclusive, early look at the home price data coming out next week from another index from ICE Mortgage Technology. This shows that annual house price growth fell from 5.3% in April to 4.6% in May. That's the slowest growth rate in seven months.
Supply starts to build, leading to a cooling of prices. According to Realtor.com, the total number of active listings is now 35% higher than it was a year ago at this time. To put that in perspective, however, even after the recent growth, inventories are still down more than 30% from typical pre-pandemic levels.
“Some buyers think they can get a deal because they hear the market is cool, and some sellers think every house will sell for top dollar regardless of condition,” said Marije Kruythoff, a Los Angeles Redfin agent, in a press release. “In reality, it all depends on the house and its location.”