T
he Federal Reserve is anticipated to reduce interest rates in the upcoming month, although a significant decrease may be necessary to stimulate a sales rebound. Key points:

    - The average rate for a 30-year fixed-rate mortgage was 6.46% this week, a slight decrease from last week's average.

    - Existing home sales increased between June and July, but remained down by 2.5% compared to the same period last year.

    - Home prices continued to rise, impacting affordability for potential buyers.

    - More potential buyers are exploring homes, but this has yet to translate into increased sales.

    - As the summer shopping season comes to an end, mortgage rates around 6.5% do not seem to be motivating potential homebuyers.

    - The average rate for a 30-year fixed-rate mortgage was 6.46% this week, according to the latest Freddie Mac survey. This represents a decrease from last week's average of 6.49% and a slight decrease over the past two weeks. Compared to last year, when rates averaged 7.23%, this marks a significant decline.

    - Rates are likely to need to fall into the 5.5% range in order to stimulate buyer demand, according to Freddie Mac's chief economist Sam Khater. This is not expected to occur in 2024, but Khater believes that rates will gradually decrease throughout the year.

    - For now, it's a waiting game for many prospective buyers and sellers who may be waiting until September when the Federal Reserve announces a rate cut. With inventory on the rise, this could mean more opportunities for those in the market. According to Realtor.com's economist Jiayi Xu, this trend is likely to benefit buyers in the fall, a season traditionally advantageous for home shoppers.

    - Sales remain sluggish due to economic reports indicating that rates need to decrease further before activity picks up. Existing home sales rose by 1.3% in July compared to June, ending a four-month decline, but sales remain down by 2.5% compared to last year, according to the National Association of Realtors.

    - The median sale price of existing homes was $422,600, up 4.2% year-over-year and marking the 13th consecutive month of year-over-year price gains, according to NAR's report.

    - Despite rates being at their lowest level in over a year, weekly applications for purchase loans were down 7% compared to the previous week and down 8% year-over-year, according to the Mortgage Bankers Association. Refinance applications remained 23% higher than a month ago, according to MBA's vice president and deputy chief economist Joel Kan.

    - Forecasters are also lowering their expectations for home sales for the rest of 2024. Fannie Mae's Economic and Strategic Research Group estimates that total sales of new and existing homes will be lower than previously forecast, at 4.78 million for the year, down from 4.81 million.

    - Despite moderately lower mortgage rates, affordability remains close to historic lows due to high home prices relative to incomes, according to Fannie Mae's deputy chief economist Mark Palim.

    - There is a silver lining: touring activity is up 9% since the beginning of the year, based on ShowingTime data, and Redfin's demand index is up 4% from a month earlier but down 8% year-over-year.

    - Redfin's demand index measures home search activity on Redfin.com.

    - Gregory Eubanks, a Redfin Premier agent in Los Angeles, has noticed an increase in momentum and excitement among clients about buying or selling a home over the past two weeks.

    - This increase in momentum stems from encouraging economic news and speculation about the Federal Reserve cutting interest rates in September. Some people are actively searching for or listing their homes right now, while others are waiting for rates to decrease significantly before making a move.

    - Inventory continues to grow as well, with a year-over-year increase of 18%. However, the pace of inventory growth is slowing down according to Redfin's four-week rolling average.