The average rate for a 30-year U.S. mortgage edged higher for the third week in a row, though it remains close to its low point in 2025.

The average long-term mortgage rate ticked up to 6.26 percent last week from 6.24 percent the week before, mortgage buyer Freddie Mac stated. A year ago, the rate averaged 6.84 percent.

Four weeks ago, the average rate was at 6.17 percent — the lowest level in more than a year.

Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also inched up last week. The rate averaged 5.54 percent, up from 5.49 percent the week before. A year ago, it was 6.02 percent, according to Freddie Mac.

When mortgage rates rise, they reduce homebuyers‘ purchasing power. The average rate for a 30-year mortgage has been stuck above 6 percent since September 2022, the year mortgage rates began climbing from historic lows.

That’s helped kept sales of previously occupied U.S. homes stuck at around a 4 million annual pace going back to 2023. Historically, sales have typically hovered around 5.2 million a year.

While sales have been sluggish this year, they received a boost this fall as mortgage rates eased. The average rate for a 30-year home loan has stayed below 6.4 percent since early September. Last month, home sales accelerated to their fastest pace since February.

Mortgage rates are influenced by several factors, from the Federal Reserve‘s interest rate policy decisions to bond market investors’ expectations for the economy and inflation. They generally follow the trajectory of the 10-year Treasury yield, which lenders use as a guide for pricing home loans.

The 10-year yield was at 4.10 percent at midday on Nov. 20. That’s down slightly from two weeks ago, but up from around 3.95 percent on Oct. 22.

Mortgage rates began declining this past summer ahead of the Federal Reserve’s decision in September to cut its main interest rate for the first time in a year amid signs the labor market was slowing. The Fed lowered its key interest rate again last month, although Fed Chair Jerome Powell cautioned that further rate cuts weren’t guaranteed.

Wall Street traders have reduced their bets that the Fed will cut its main interest rate at its next meeting in December, now giving it a roughly 44 percent probability, according to data from CME Group. That’s down from nearly 70 percent a few weeks ago, but better than the 30 percent chance before the release of the delayed September jobs report.

The central bank doesn’t set mortgage rates, and even when it cuts its short-term rates that doesn’t necessarily mean rates on home loans will necessarily decline.

Last fall, after the Fed cut its rate for the first time in more than four years, mortgage rates marched higher, eventually reaching just above 7 percent in January this year. At that time, the 10-year Treasury yield was climbing toward 5 percent.

Recent forecasts by economists at the National Association of Realtors and First American call for the average rate for a 30-year mortgage to drop to around 6 percent next year.

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LOS ANGELES — The number of U.S. homes that typically change hands as people relocate for work, retire or trade up for more living space hasn’t been this low in nearly 30 years.

About 28 out of every 1,000 homes changed hands between January and September. That is the lowest U.S. home turnover rate going back to at least the 1990s, according to an analysis by Redfin.

The home turnover rate represents the number of homes sold, divided by the total number of existing sellable properties. While sales data show whether more or fewer homes are selling in a given period, the home turnover rate helps illustrate how homeowners are staying put longer.

“It’s not healthy for the economy that people are staying put,” said Daryl Fairweather, chief economist at Redfin.

The home sales turnover rate through the first nine months of this year is down about 30 percent from the average rate over the same time periods between 2012 and 2022.

Traditionally, a breadwinner’s new job or a growing family’s need for more space motivate homeowners to sell and relocate. The fact that fewer homes are changing hands suggests there are fewer opportunities for employment mobility or perhaps selling and buying at today’s prices and mortgage rates is unaffordable.

“If people are stuck, it’s reflective of how the economy is stuck,” Fairweather said. “We’re in a low-hire, low-fire labor market and I think that this goes hand in hand with that.”

U.S. employers added just 22,000 jobs in August, according to the Labor Department, down from 79,000 in July and well below the 80,000 that economists had expected.

Government hiring data is on hold during the shutdown, so the Labor Department’s tally of hiring in September was never released, but earlier this month a survey by payroll company ADP showed that the private sector lost 32,000 jobs in September.

Meanwhile, several large companies, including Microsoft, General Motors, Amazon and Target, have announced job cuts.

The slowing job market has many Americans increasingly concerned. That is not a good recipe for home sales.

Another factor keeping a lid on home sales: Many homeowners who bought or refinanced at rock-bottom mortgage rates in 2020 and 2021 have little incentive to sell and buy a home at current home loan rates.

The U.S. housing market has been in a slump dating back to 2022, the year mortgage rates began climbing from historic lows that fueled a homebuying frenzy at the start of this decade.

Sales of previously occupied U.S. homes sank last year to their lowest level in nearly 30 years. Sales have been sluggish this year, although they accelerated last month to their fastest pace since February as mortgage rates eased. The average rate for a 30-year mortgage fell last week to its lowest level in more than a year.

While lower rates boost home shoppers’ purchasing power, borrowing costs remain too high for many Americans to afford to buy a home following years of skyrocketing prices. The median sales price of a previously occupied U.S. home has risen 53 percent over the past six years.

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The average rate for a 30-year U.S. mortgage has fallen to its lowest level in nearly 10 months, giving prospective homebuyers a sorely needed boost in purchasing power that could help inject life into a stagnant housing market.

The long-term rate dropped from 6.63 percent to 6.58 percent last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.49 percent.

Borrowing costs for 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, also fell. The average rate dropped from 5.75 percent to 5.71 percent last week. A year ago, it was 5.66 percent, Freddie Mac said.

Elevated mortgage rates have helped keep the U.S. housing market in a sales slump since early 2022, when rates started to climb from the rock-bottom lows they reached during the pandemic. Home sales sank last year to their lowest level in nearly 30 years.

This is the fourth week in a row that rates have come down. The average rate for a 30-year mortgage is now at its lowest level since Oct. 24, when it averaged 6.54 percent.

Mortgage rates are influenced by several factors, such as the Federal Reserve‘s interest rate policy decisions and bond market investors’ expectations for the economy and inflation.

The main barometer is the 10-year Treasury yield, which lenders use as a guide to price home loans. The yield was at 4.29 percent at midday on Thursday, up slightly from 4.24 percent late Wednesday.

The yield has come down the last couple of weeks after weaker-than-expected July U.S. job market data fueled speculation that the Fed will cut its main short-term interest rate next month.

A Fed rate cut could give the job market and overall economy a boost, but it could also fuel inflation just as President Trump’s tariff policies risk raising prices for U.S. consumers.

Meanwhile, a new inflation report Thursday showed prices at the U.S. wholesale level jumped 3.3 percent last month from a year earlier. That was well above the 2.5 percent rate that economists had forecast, and it could hint at higher inflation ahead.

Earlier this week, the Labor Department said consumer prices in July, though unchanged from June, rose 2.7 percent from a year earlier.

Higher inflation could push bond yields higher, driving mortgage rates upward in turn, even if the Fed cuts its key rate.

Economists generally expect the average rate for a 30-year mortgage to remain above 6 percent this year. Recent forecasts by Realtor.com and Fannie Mae project the average rate will ease to around 6.4 percent by the end of this year.

That may not be low enough to make a difference. While trends like declining home listing prices and more properties on the market in the Sunbelt and West now favor buyers, affordability remains a major hurdle for many aspiring homeowners.

Home price growth has slowed nationally, but the median sales price of a previously occupied U.S. home still climbed to an all-time high of $435,300 in June.

“Homebuyers who have been relegated to the sidelines by high financing costs got some encouragement in the past two weeks, but it remains to be seen if it’s enough to get more of them back in the game,” said Joel Berner, senior economist at Realtor.com.

The recent drop in mortgage rates has spurred many homeowners to refinance, however.

Mortgage applications jumped 10.9 percent last week from the previous week as rates eased, boosted by homeowners seeking to refinance, according to the Mortgage Bankers Association.

Home loan refinance applications made up nearly 47 percent of all mortgage applications. Refi loan applications jumped 23 percent from a week earlier – the strongest showing since April.

Meanwhile, applications for adjustable-rate mortgages, or ARMs, soared 25 percent to their highest level since 2022, MBA said.

Many homeowners aren’t waiting for rates to ease further before refinancing. Cash-out home refinancing activity surged to a nearly three-year high in the April-June quarter, as homeowners tapped some of the equity gains built up after years of soaring home prices.

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Sales of previously occupied U.S. homes fell in April, as elevated mortgage rates and rising prices discouraged prospective homebuyers during what’s traditionally the busiest time of the year for the housing market.

Existing home sales dropped 0.5 percent last month, from March, to a seasonally adjusted annual rate of 4 million units, the National Association of Realtors said Thursday. The decline marks the slowest sales pace for the month of April going back to 2009 in the wake of the U.S. housing crisis. March’s sales pace was also that month’s slowest going back to 2009.

Sales fell 2 percent compared with April last year. The latest home sales fell slightly short of the 4.10 million pace economists were expecting, according to FactSet.

Home prices increased on an annual basis for the 22nd consecutive month, although at the slowest rate since July 2023. The national median sales price rose 1.8 percent in April from a year earlier to $414,000, an all-time high for the month.

“The affordability condition is clearly hurting the market, particularly higher mortgage rates,” said Lawrence Yun, NAR’s chief economist.

For the past three years, sales of previously occupied U.S. homes have been at about 75 percent of what they were before the pandemic. The market slump began in early 2022, when mortgage rates began to climb from pandemic-era lows. Sales of homes fell last year to their lowest level in nearly 30 years.

The average rate for a 30-year mortgage has remained relatively close to its high so far this year of just above 7 percent, which it set in mid-January, according to mortgage buyer Freddie Mac. The average rate’s low point so far was five weeks ago, when it briefly dropped to 6.62 percent. Last week, it averaged 6.86 percent, its highest level since mid-February.

Homes purchased last month likely went under contract in March or April, when the average rate for a 30-year mortgage ranged from 6.62 to 6.83 percent.

High mortgage rates, which can add hundreds of dollars per month in costs for borrowers, have frozen out many would-be homebuyers struggling to find a home they can afford.

Homeownership is out of reach for many Americans after years of surging home prices. The median U.S. home sales price has jumped 53 percent over the past six years.

Home shoppers who can afford to buy at current mortgage rates are benefiting from more homes on the market when compared with recent years.

There were 1.45 million unsold homes at the end of last month, a 9 percent increase from March, and 20.8 percent more than April last year, NAR said. That’s the most homes on the market since September 2020, but still significantly fewer than the roughly 2 million homes for sale that was typical before the pandemic.

The latest unsold inventory snapshot translates to a 4.4-month supply at the current sales pace, up from a 3.5-month pace at the end of April last year. Traditionally, a supply of five to six months is considered a balanced market between buyers and sellers.

One reason the inventory of homes for sale has been rising is that properties are taking longer to sell. Homes typically remained on the market for 29 days last month before selling, up from 26 days in April last year, NAR said.

The wider selection of homes on the market likely helped boost sales among first-time homebuyers. They accounted for 34 percent of sales last month – the highest level since July 2020 but still down from the historical norm of 40 percent.

Home shoppers who can afford to sidestep mortgage rates and pay all cash for a home accounted for 25 percent of sales last month, down from 28 percent a year earlier. Investors, who account for many all-cash purchases, made up 15 percent of home sales last month, down from 16 percent a year earlier, NAR said.

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By ALEX VEIGA
AP Business Writer

Sales of previously occupied U.S. homes rose in November to their fastest pace since March with home shoppers encouraged by a wider selection of properties on the market, even as mortgage rates mostly ticked higher.

Existing home sales rose 4.8 percent in November from October, to a seasonally adjusted annual rate of 4.15 million, the reported recently.

Sales accelerated 6.1 percent compared with November last year, representing the biggest year-over-year gain since June 2021. The latest home sales topped the 4.1 million pace economists were expecting, according to FactSet.

Home prices increased on an annual basis for the 17th consecutive month. The national median sales price rose 4.7 percent from a year earlier, to $406,100.

Despite increasing in November and October, home sales are still running below last year’s pace, when they sank to a nearly 30-year low.

“Looks like we won’t match last year in terms of the annual total, so it will be the lowest home sales since 1995,” said Lawrence Yun, the NAR‘s chief economist.

The U.S. housing market has been in a sales slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. A shortage of homes for sale has helped prop up prices, which as of last month are up 50 percent nationally since 2019.

Mortgage rates have come down this year after the average rate on a 30-year home loan reached a 23-year high of nearly 8 percent in October 2023, but not nearly enough to make a difference for many would-be homebuyers.

The average rate eased to a two-year low just above 6 percent in September following the Federal Reserve‘s decision to cut its main interest rate for the first time in more than four years. But it has mostly risen since then.

Home sales that closed in November likely reflect contracts signed in September and October, when mortgage rates were more attractive.

In 2025, the outlook for mortgage rates remains cloudy. Many economists predict that the average rate on a 30-year mortgage will ease this year, but generally hold above 6 percent.

Home shoppers who could afford to buy in November benefited from a pickup in the homes that are available. There were 1.33 million unsold homes at the end of last month, down 2.9 percent from October, but up 17.7 percent from November last year, NAR said. That translates to a 3.8-month supply at the current sales pace, down from a 4.2-month pace at the end of October last year, but up from 3.5-month pace in November last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.

“We are seeing sales increase because of this increase in inventory of inventory,” Yun said.

Still, the supply of homes on the market remains about 30 percent below what it was before the pandemic.

Limited inventory, especially in the more affordable price range of a given market, helps drive prices higher. That’s one reason first-time homebuyers, who don’t have any home equity to put toward their down payment, continue to struggle to afford a home.

They accounted for just 30 percent of all homes sold in November. That’s up from 27 percent in October, but down from 31 percent in November last year. First-time buyers have accounted for 40 percent of sales historically.

Homebuyers who can afford to sidestep mortgage rates and pay all cash for a home accounted for 25 percent of sales in November, down from 27 percent a year earlier.

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By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) — Sales of new single-family homes rose 12.4 percent in November, the fastest pace in seven months, as the housing industry continued to benefit from low mortgage rates and strong demand.

The November increase pushed the seasonally adjusted annual sales pace to 744,000 last month, the best showing since reaching 796,000 in April.

The median sales price of a new home sold in November hit $416,900, 14.1 percent higher than a year ago.

Demand has surged this year as many Americans cooped up by the pandemic seek out larger homes.

The sale of previously occupied homes rose for a third straight month in November to a seasonally adjusted annual rate of 6.46 million units, the fastest pace since January, according to a report this week from the National Association of Realtors.

Extraordinarily low mortgage rates have intensified demand.

Freddie Mac reported Thursday 30-year fixed rate mortgages averaged 3.05 percent last week, down from 3.12 percent two weeks ago.

Mortgage rates are likely to move higher next year as the Federal Reserve phases out the monthly bond purchases it has been making since the pandemic hit nearly two years ago. The Fed has already signaled that it expects to start raising interest rates as early as next spring to check sharply rising inflation.

But interest rate increases are expected to be modest and the shift higher may actually intensify demand as Americans try to lock in rates before they head even higher.

“Anticipation of higher mortgage rates as the Fed tapers should be supportive of sales over coming months,” predicted Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

For November, sales were up in every region of the country except the Midwest, which saw a 25.4 percent drop. New home sales surged 53.2 percent in the West and were up 15.6 percent in the Northeast and 2.7 percent in the South.

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By ALEX VEIGA
AP Business Writer

Sales of previously occupied U.S. homes ticked higher in October, marking their strongest annual pace since January even as competition for relatively few properties on the market pushed prices higher.

Existing homes sales rose 0.8 percent last month from September to a seasonally-adjusted annual rate of 6.34 million units, the National Association of Realtors said Monday. That was stronger than the 6.18 million units that economists had been expecting, according to FactSet.

Sales fell 5.8 percent from October last year, when they peaked following a summer and fall surge as buyers who had held off during the early days of the pandemic jumped back into the market.

“It looks like the housing market is remaining strong, resilient and one may even say, (had) something like a mini surge, not the big one we saw last year,” said Lawrence Yun, the NAR‘s chief economist.

Continued job growth, a stock market at all-time highs and rising, but still historically low mortgage rates are helping to drive home sales, Yun said.

Resilient demand continues to push the cost of a home higher. The national median home price jumped to $353,900 last month, a 13.1 percent increase from October last year, the NAR said.

Though up in general, sales were mixed by region. Sales fell 2.6 percent last month in the Northeast and were flat in the West. Sales rose 4.2 percent in the Midwest and edged up 0.4 percent in the South. Each region’s sales were down from October last year.

Through the first 10 months of the year, home sales are up 11 percent from where they were last year and are 13 percent higher than they were in the same stretch of 2019.

“We’re easily on pace for an annual total of at least 6 million this year, which would be the best performance in 15 years,” Yun said.

Home sales have been healthy for most of this year, spurred by an ongoing desire among many people for greater space to wait out the coronavirus pandemic. Mortgage rates are also historically low, though they’ve begun to creep higher in recent weeks.

The average rate on the benchmark 30-year mortgage was 3.1 percent last week, up from 2.98 percent the previous week. A year ago, the rate averaged 2.72 percent. That upward trend is prompting some potential homeowners to act more quickly.

Homes continue to sell within days of being put up for sale. Homes typically remained on the market 18 days before getting snapped up last month. That follows a six-month streak of homes typically selling after 17 days on the market. In a market that’s more evenly balanced between buyers and sellers, homes typically remain on the market 45 days. All told, 82 percent of homes sold in October were on the market for less than a month, the NAR said.

At the end of October, the inventory of unsold homes stood at just 1.25 million homes for sale, down 0.8 percent from September and down 12 percent from a year ago. At the current sales pace, that amounts to a 2.4 months’ supply, the NAR said.

Despite the historically low interest rates, the lack of supply combined with a surge in home prices has left many would-be buyers frustrated, especially those shopping for homes in the more affordable end of the market.

Among homes priced at $150,000 or less, sales slumped 24 percent last month, reflecting a dearth of properties available in that price range. Sales of homes in the $250,000 to $500,000 range dropped 2 percent. Much of October’s home sales increase was concentrated among properties that sold for $750,000 and higher, the NAR said.

First-time buyers accounted for 29 percent of homes sold last month, up from 28 percent in September. They made up 32 percent of sales in October last year, the NAR said.

Investors, meanwhile, made up 17 percent of sales last month, up from 13 percent in September and 14 percent in October last year. All-cash sales accounted for 24 percent of transactions last month, the NAR said. That’s up from 23 percent in September and 19 percent in October 2020.

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By ALEX VEIGA
AP Business Writer

LOS ANGELES (AP) — Soaring home prices have pushed up average homeowner equity growth to the highest level in more than a decade, though recent signs of a cooling U.S. housing market point to more moderate gains in the second half of the year.

Homes with a mortgage gained an average of $51,500 in equity in the second quarter, an increase of 29.3 percent from the April-June quarter last year, according to real estate information company CoreLogic. That’s the highest quarterly average gain in home equity since the second quarter of 2010, the firm said.

That works out to nearly $3 trillion in equity gained by U.S. homeowners with a mortgage, which is about 63 percent of all homes, CoreLogic said. Average homeowner equity jumped nearly 20 percent in the first quarter from a year earlier.

Home equity growth can have broad impacts on the economy, giving homeowners more financial flexibility to spend on big purchases or build a nest egg. Rising home values also make it increasingly tougher for would-be homeowners to buy.

Homeowners in California, Washington state and Idaho saw among the biggest average equity increases in the second quarter: $116,000 in California, $103,000 in Washington state and $97,000 in Idaho.

The surge in homeowner equity gains follows a record run up in U.S. home prices this year amid a searing hot housing market fueled by ultra-low mortgage rates, a thin inventory of properties for sale and many would-be buyers’ desire for more living space during the pandemic.

S&P said this week that its closely watched S&P CoreLogic Case-Shiller 20-city home price index surged 19.9 percent in July from a year earlier, the largest gain on records dating back to 2000.

Still, there are signs the soaring home price gains fueling homeowner equity may have peaked.

The National Association of Realtors’ most recent housing market snapshot showed the median home price of previously occupied U.S. homes rose 14.9 percent in August from a year earlier to $356,700. That’s a more modest gain than earlier this year, when year-over-year increases were running at 20-25 percent.

“It seems that there was that shift from July to August where there starts to be a little bit of pushback in terms of where prices have gone,” said Ali Wolf, chief economist at Zonda Economics, a real estate industry tracker.

Wolf projects that U.S. home price growth will slow to about 5 percent next year, citing expectations of modestly higher mortgage rates and a small, but notable increase in the number of homes on the market.

“The days of runaway home price growth are behind us,” she said.

In its most recent quarterly housing forecast, mortgage buyer Freddie Mac envisions home prices growing 5.3 percent next year, down from a projected 12.1 percent increase in 2021.

If those home price outlooks hold, it would translate into a less torrid pace for homeowner equity growth next year. Still, the outsized growth in homeowner equity this year will have ripple effects for the broader economy, and the housing market.

Rising homeowner equity creates a buffer for borrowers against potential financial hardship, such as job loss. And it can give homeowners financial flexibility to borrow against their equity to pay off high-interest debt or finance large purchases, such as home improvement projects, which can give a boost to the economy.

“It is good for wider economic growth, but there’s an ugly side to today’s level of pricing,” Wolf said. “Those who have chosen not to purchase a home or have been unable to are finding it very hard to enter the market now, and in a lot of cases these individuals are missing out on wealth accumulation.”

The surge in home prices this year has made it tougher for would-be homeowners to buy. First-time buyers accounted for 29 percent of home sales in August, according to the National Association of Realtors. A year ago they made up 33 percent of buyers.

The U.S. homeownership rate was 65.4 percent in the second quarter, down from 66.6 percent last year and 66.2 percent a decade ago.

The increase in home equity has helped limit the number of homeowners who end up “underwater” on their mortgage, or owing more on their loan than their home is worth. Also known as being in negative equity, that can happen when a home’s value declines, or when the size of the mortgage increases, say when someone takes out a home equity loan.

At the end of the second quarter, 1.2 million homes, or 2.3 percent of all U.S. homes with a mortgage, were in negative equity, CoreLogic said. That’s down 30 percent from the same quarter last year.

Among U.S. metropolitan areas, Chicago had the biggest share of homes with negative equity in the April-June quarter at 5.2 percent, the firm said.

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By CHRISTOPHER RUGABER
AP Economics Writer

WASHINGTON (AP) — U.S. home prices soared in April at the fastest pace since 2005 as potential buyers bid up prices on a limited supply of available properties.

The S&P CoreLogic Case-Shiller 20-city home price index jumped nearly 15 percent in April from the previous year. That is up from a 13.4 percent annual gain in March.

Many Americans have sought more living space since the pandemic began, seeking larger homes in suburbs rather than apartments or smaller homes in cities.

Historically low mortgage rates, restrained in part by the Federal Reserve‘s low-interest rate policies, have also spurred demand, just as the large millennial generation ages into a peak home-buying period. The price gains have been so dramatic that home sales have started to slow as more would-be buyers are priced out of the market.

Still, economists said there is little sign that the housing market‘s blistering price increases are likely to cool off soon.

“The forces that have propelled home price growth to new highs over the past year remain in place and are offering little evidence of abating,” said Matthew Speakman, an economist at real estate data provider Zillow.

All 20 cities that make up the index reported higher year-over-year price gains in April than the previous month. Five cities — Charlotte, Cleveland, Dallas, Denver, and Seattle — had the largest 12-month price increases on records dating back 30 years.

Even as demand rose during the pandemic, fewer Americans were willing to sell their properties, perhaps reluctant to have waves of potential buyers troop through their homes. That sharply reduced the number of houses available, setting off bidding wars for most properties. Last month, nearly half of homes sold were selling for above their asking price, according to realty company Redfin.

In May, the number of available homes ticked up slightly, to 1.23 million. But that was still down 21 percent compared with a year earlier.

Sales of existing homes have fallen for four straight months, likely because soaring prices have discouraged some would-be buyers. Still, demand is strong enough that a typical home was on the market for just 17 days in May, the National Association of Realtors said. Nearly nine of 10 homes were on the market for less than a month.

Phoenix reported the largest price gain in April for the 22nd straight month, according to the Case-Shiller index, with an increase of 22.3 percent from a year earlier. San Diego followed at 21.6 percent, followed by Seattle at 20.2 percent.

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In Portland these days, a half million dollars might get you an average house.

The median price of a single-family home in the Portland-metro area reached $479,100 in February, up 17.7 percent from 12 months previous and 4.2 percent from January, according to RMLS, a listing service.

As the busy spring season begins, historically low inventory and attractive mortgage rates are pushing home prices to new heights. Soaring lumber prices are buttressing the trend, raising the costs of new homes.

Inventory has hovered around one month since fall 2020, sending buyers into bidding wars. About six months of inventory is considered a balanced market.

“We just listed a property on (March 11), and we had a $70,000-over offer immediately,” said Jessica Tindell, president of the Portland Metropolitan Association of Realtors and principal broker of Tindell & Co. Real Estate and Property Management. “We continue to see very aggressive offer structures.”

Some buyers are upping their offers after coming up short, Tindell said.

“These are buyers that are writing seven or eight offers and losing out, so each time they get a little bit more motivated,” she said.

Low housing inventory is a widespread problem. U.S. housing inventory during December 2020 was the lowest since the National Association of Realtors began keeping track in 1999.

There could be some relief on the way. The NAR has tracked a rise in housing permits for eight consecutive months.

“There will also be a natural seasonal upswing in inventory in spring and summer after few new listings during the winter months,” NAR Chief Economist Lawrence Yun stated in a news release. “These trends, along with an anticipated ramp-up in home construction, will provide for much-needed supply.”

High prices are leading to “a lot of really sad buyers,” said Andee Zeigler, a principal broker at Living Room Realty.

“I’ve been doing this 13 years, and this is going on the second year now where it’s really difficult for first-time homebuyers in their 30s, born and raised in Portland, who had dedicated their lives in this community and now they’re ready to buy a home – and they just can’t,” she said.

The market dynamics are also leading to some risky behaviors by prospective buyers, Zeigler said.

“People should not be waiving their inspections entirely, and people should not be waiving their appraisals entirely,” she said. “That’s just super-dangerous.”

In Portland, some homebuilders are responding to demand by providing nontraditional types. In Westmoreland, in Southeast Portland, developer Marty Kehoe is building nine attached townhomes of about 2,700 square feet each. The townhomes, expected to be completed in mid-June, will be priced $800,000 to $900,000 apiece, he said.

Asked why he opted to build townhomes, Kehoe said such a project fit within city parameters for the site.

“We try not to fight the zoning issues with the city,” he said.

In Sellwood, two homes were completed recently along a narrow residential street, across from a New Seasons grocery store. The project involved renovating the existing early 20th-century homes and adding accessory dwelling units. The homes are on the market for $1.295 million each, an eyebrow-raising sum for the neighborhood.

Some buyers are going into transactions with little knowledge of Portland’s property taxes, which can vary greatly for neighboring lots based on homes’ ages, Zeigler said.

“Property taxes on new construction are kind of off the charts,” she said. For a buyer of a new home, “they’re looking at property taxes that are double their neighbor’s 1920s bungalow.”

Mortgage rates have begun to inch up, while remaining low by historical standards. The average rate for a 30-year fixed mortgage reached 2.81 percent in February, up from a trough of 2.68 percent in December 2020.

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