Current State of Mortgage Rates and Home Sales

As of July 1, 2024, mortgage rates for home buyers in Washington are notably high. The interest rates have reached 6.81% for a 30-year fixed mortgage and 6.16% for a 15-year fixed mortgage. This increment comes after a recent uptick at the end of June, marking the first rise in rates for the month. The 30-year fixed-rate mortgage specifically saw a minor jump, averaging at 6.81%, which is up five basis points from the prior week.

Recent data from the National Association of Realtors (NAR) reports that pending home sales were down by an average of 2.1% in May. The month-over-month statistics paint a mixed picture with declines in the Midwest and South regions, while the Northeast and West regions experienced increases. Nevertheless, when viewed on a yearly basis, pending home sales have declined across all regions, signaling a potential cooling off period for the market.

Market Predictions and Home Price Trends

As we move deeper into 2024, the housing market is in a unique position with increasing inventory juxtaposed with reduced demand. NAR Chief Economist Lawrence Yun remains optimistic, suggesting that a decrease in mortgage rates could trigger an inevitable rise in home sales. This goes hand in hand with NAR’s prediction that median existing home prices will climb to a record high of $405,300 this year, up from $389,800 in 2023.

Affordability remains a significant concern with median-income households needing to put down approximately $127,750, or 35.4%, to comfortably afford a mortgage on an average home. This marks a substantial barrier for many potential buyers, especially in a market where home prices continue to soar.

Regional Focus and Economic Influences

Zooming in on specific regional markets, Spokane County’s housing values have seen a slight year-over-year decrease from $431,728 to $428,617, a minimal 0.72% drop. This minor decline follows a modest 2.4% boost from 2022 to 2023 and a significant jump of nearly $100,000 from 2021 to 2022, highlighting the area’s fluctuating market dynamics.

Although the Federal Reserve does not directly set fixed mortgage rates, its policy decisions have a profound influence on the market. Top officials have hinted at potential rate cuts later in 2024, albeit the process of reducing the inflation rate has been unexpectedly slow. When these rate cuts do come into effect, they are expected to invigorate the real estate market, encouraging prospective buyers and allowing sellers to upgrade without increasing their monthly mortgage payments.