What happened: Existing home sales this spring continue to be suppressed from typical seasonal levels.
Why it matters: Fewer buyers have been able to enter the market as affordability has locked them out, and fewer homeowners are willing to list their homes for sale for many of the same reasons, both contributing to slowing sales.
What Zillow Senior Economist Nicole Bachaud thinks: Prices are starting to warm up again signaling that demand is returning when dips in mortgage rates and creative financing strategies allow. But with inventory levels far off from pre-pandemic levels as existing homeowners are still facing mortgage rate lock-in, existing home sales are taking a hit. Low inventory in general is going to remain a driving force in the movement of prices in the housing market, so affordability will likely be a barrier to those looking to transact for the foreseeable future. As we move further away from the days of 3% rates, existing homeowners will become less precious about their ultra-low monthly payments and new listings will slowly fill the market again, but as new home construction is shying away from the 2021 building boom, overall inventory will stay tight. Potential buyers trying to wait out this market for affordability to improve might consider exploring creative financing opportunities instead, like getting down payment assistance, buying points or asking a seller for a 2:1 buydown, to make this market work in their favor.