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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 74 J O U R N A L July 2023 the previous year. The median price in the Midwest was $298,000, up 1.1% from May 2022. » Existing-home sales in the South expand- ed 1.5% from April to an annual rate of 2.02 million in May, sliding 16.5% from the prior year. The median price in the South was $361,400, down 2.7% from May 2022. » In the West, existing-home sales rose 2.6% from the previous month to an annual rate of 790,000 in May, down 25.5% from one year ago. The median price in the West was $596,500, down 5.7% from May 2022. Realtor.com Chief Economist Danielle Hale commented on the NAR's report: "Sales of existing homes steadied in May, increasing 0.2% to a pace of 4.30 million as gains in the South and West offset mild de- clines in the Northeast and Midwest. The pace of home sales continues to exceed the 4 million sales low reached in January, yet it still lags year-ago sales by a considerable 20.4%." "Mortgage rates in April were relatively steady, and the median home sale price continued to decline modestly, dropping 3.1% from May 2022. This gave buyers time to shop without fear of having to reset their housing budgets while on the hunt. Nevertheless, nearly 4 in 5 (78%) home shoppers surveyed this spring thought it at least somewhat likely that they would be priced out of the housing market if home prices and rates continue to rise." "A dearth of newly listed homes has made it challenging for buyers to find a good match if their criteria are too specific. Although total inventory in May was up 3.8% from April, it was down 6.1% from one year ago, and the number of newly listed homes fell 22.7% behind last May. Nevertheless, a market rendered slightly less competitive amid high costs is opening doors for some buyers. The first-time buyer share dipped from April but was up to 28% in May from 27% one year ago." "With fewer homeowners poised to become sellers in 2023, buyers have a tough road ahead. Our revised 2023 outlook expects that there will be some positives, namely, a gradual decline in mortgage rates beginning midyear and a continued softness in home prices that will start to stabilize high housing costs. On net home sales are expected to tally roughly 4.2 million in 2023, their lowest annual total since 2012." BIDDING WARS ARE BACK DUE TO LOW INVENTORY I t looks like the typically hot summer buying and selling season may be in trouble according to a new Redfin report which found the number of homes for sale in May 2023 fell 7.1% to 1.4 million units on a seasonally adjusted basis, which equates to the lowest level in Redfin's history and the first annual decline since April 2022. In comparison to pre-pandemic numbers, there were 2.2 million homes for sale over the same period in May 2019, meaning that the housing supply is 38.6% below where it previously was. Housing stock has evaporated due to the lack of people selling their homes due to the lock-in effect. New listings of homes for sale declined 25.2% year over year in May to the third lowest level on record on a seasonally adjusted basis, as homeowners were hand- cuffed by high mortgage rates. Due to ultra-low interest rates, the market saw during the pandemic, nearly every homeowner with a mortgage refinanced to get an interest rate below 6%. The average 30-year-fixed mortgage rate in May was 6.43%, up from 5.23% a year earlier and a record low of 2.65% in 2021. Due to the low inventory levels, the medi- an U.S. home sale price was $419,103 in May. That's down just 3.1% from a year earlier when prices hit a record high of $432,311. While home prices fell in May, they posted a smaller decline than they did in April, when prices dropped 4.2% from a year earlier—the largest decrease on record except for January 2012. "It's too early to say that price declines have bottomed out," Redfin Chief Economist Daryl Fairweather said. "Prices may have room to fall because mortgage rates could still rise. The Federal Reserve just signaled that it is likely to continue raising interest rates this year. That could further hamper homebuyer demand and cause home prices to fall in the near term, though the drops would be minimal. We're unlikely to see double-digit price declines like we did during the 2008 housing crisis." Fairweather continued: "Many people think it's a bad time to buy a home because mortgage rates are high, but they should keep in mind that when rates do ultimately fall, many buyers waiting on the sidelines could jump back in. That could lead to more bid- ding wars since there aren't enough homes for sale, and heightened competition could push up prices, offsetting some—or all—of the benefit of lower interest rates." According to Redfin, the average sale-to- list price ratio, which measures how close homes are selling to their final asking prices,