Home listings are rising fast but nobody wants them, Fannie Mae says

America’s housing market remains stuck in limbo, even as more homeowners put their properties up for sale.

According to Fannie Mae, home listings have surged by more than a third over the past year. Unfortunately, that has done very little to boost home sales.

“Home price growth in the second quarter was stronger than previously anticipated,” Fannie Mae said.

“Despite a more than 30% increase in listings of homes available for sale compared to a year ago, certain indicators of housing activity remain soft.”

By “soft,” Fannie Mae meant the sharp decline in home sales. In May, home sales fell to one of the lowest levels on record, according to Redfin data.

June was another lousy month for real estate sales. Existing home sales declined by 5.4%, while new home sales dipped by 0.6% to a seven-month low.

Fannie Mae’s vice president and chief economist, Doug Duncan, said the housing market “continues to wait for affordability to improve, even as the supply of new and existing homes for sale slowly rises.”

While an increase in housing supply is working to bring prices down in some parts of the country, national prices continue to creep higher.

With still-elevated mortgage rates on top, it's no wonder Americans have little appetite to get back into the housing market.

A market that favors the rich

According to the National Association of Realtors, the national average home price reached a record high of $426,900 in June—marking a 4.1% increase from a year earlier.

Assuming a 20% down payment on that price, buyers would need to pay nearly $2,600 per month in mortgage, taxes, and insurance costs, according to Zillow’s 30-year mortgage calculator.

High financing costs are forcing many first-time buyers to remain on the sidelines.

As Creditnews reported, this isn’t a problem for wealthier Americans, who are sidestepping the mortgage market entirely by making all-cash offers.

In fact, nearly half of high-end homebuyers are making all-cash offers, according to Redfin. This explains why the market for high-end property—homes valued at $1 million or more—remains red hot.

“Historically, higher-priced homes are the first to feel the hit when interest rates rise,” said Zonda chief economist Ali Wolf.

“We aren’t seeing that today. High home equity and the strong stock market have acted as a buffer against interest rates for wealthier Americans.”

In recent weeks, mortgage rates have dipped, largely on speculation that the Federal Reserve will cut interest rates in September. Despite the drop, 30-year rates hover around the 7% mark, based on Freddie Mae data.

The Mortgage Bankers Association reported that average mortgage rates on conforming loan balances fell by 0.13% to 6.87% in mid-July.

This was the biggest drop in four months, but it was still not enough to encourage sidelined buyers to come back into the market.