Skylar Olsen of Zillow reports that home value growth has slowed down, with an annual appreciation of 3.2% nationally. Zillow forecasts home values to rise just 1% nationally through June 2025. The typical home value in the U.S. in June was $362,482, up 0.6% from last month and 3.2% higher than last year. Monthly growth decelerated to 0.6%, the slowest June appreciation since 2011.

Source: Zillow (August 2024)

According to a new report from CoreLogic, home prices rose by 4.7% in June 2024 compared to June 2023. On a month-to-month basis, home prices in June 2024 increased by 0.3% compared to May 2024. The CoreLogic HPI Forecast predicts a further 0.3% increase from June 2024 to July 2024 and a 2.3% increase from June 2024 to June 2025.

According to CoreLogic’s chief economist Selma Hepp:

“Housing market activity essentially froze at the end of the spring homebuying season as high mortgage rates continued to compress affordability and dissuade potential homebuyers. The 0.3% gain in prices from the month before was less than half the increase seen between May and June prior to the pandemic, when the gains averaged 0.8%. In addition, cooling home prices continued to spread across more markets, and nine states reported a monthly decline, up from three states last month. The April surge in mortgage rates notably weighed on consumer sentiment, and consumers increasingly chose to respond to the anticipation of a lower mortgage rate environment later this year.”  

Mark Worley and Chen Zhao of Redfin report on the overall value of the housing market, noting that it increased $3.1 trillion over the past 12 months to a total value of $49.6 trillion. Eight metros boast trillion-dollar home values, including new entrants like Anaheim and Washington, DC. While millennial homeowners enjoyed a 20% surge in property value, the Silent Generation’s real estate worth continued its decline.

Anushna Prakash of Zillow reports specifically on luxury home values, which are typically slow to grow, have outpaced typical homes for five consecutive months, rising 3.9% annually compared to 3.2% for standard homes. Zillow defines luxury homes as the top 5% most valuable in any region. Since February 2024, luxury properties have seen faster growth, likely due to affluent buyers who are less impacted by high mortgage rates and can often pay in cash.

Source: Zillow (August 2024)

Refinances

According to new data from the Mortgage Bankers Association (MBA), refinance applications are up 16% from last week and 59% higher than a year ago. MBA’s deputy chief economist Joel Kan notes: “As a result of lower rates, refinance applications increased across all loan types, particularly for VA loans, and were almost 60 percent higher than at this time last year and were at its highest level in two years.”

Diana Olick of CNBC reports on this data, highlighting that while the refinance increases are large, they are relative to a small starting point. Most borrowers currently have loans with interest rates lower than 5%. Fewer than 1 million borrowers could use refinancing to reduce their current interest rate by at least 0.75%.

Alex Veiga of AP News reports that overall home loan applications increased last week, reaching their highest level since January. However, much of this increase was due to the surge in refinance applications. Despite the lower borrowing costs, applications for loans to buy a home only rose by 0.8% from the previous week and were down about 11% from a year earlier.

Source: AP News (August 2024)

“The average rate on a 30-year mortgage was 6.73% last week, its lowest level since early February, according to mortgage buyer Freddie Mac. The average rate declined again this week, falling to 6.47%, the lowest level in more than a year. After jumping to a 23-year high of 7.79% in October, the average rate has mostly hovered around 7% this year — more than double what it was just three years ago.”

Real estate commissions

According to Emily Peck of Axios, real estate commissions have slightly decreased since the Sitzer-Burnett settlement in March, with buyer agent fees dropping from 2.62% to 2.55%. 

Source: Axios (August 2024)

According to Peck, starting August 17, new rules will prevent listing commission rates in the MLS, potentially driving fees down further. While commission percentages dipped, the actual dollar amount earned by agents increased slightly due to rising home prices, meaning homebuyers might save marginally on commissions. Still, high prices and mortgage rates remain the larger challenges.

Regarding the new changes this weekend, Andrew Khouri of Yahoo! News reports that real estate commission rules will shift, requiring homebuyers to negotiate the commission their agent earns directly. Previously, sellers paid a 5% to 6% commission, split between the buyer’s and seller’s agents, often leaving little room for negotiation. The new rules aim to increase consumer bargaining power and potentially lower commission rates, though there’s concern this could introduce upfront costs for buyers amid already unaffordable housing prices.

James Kleimann of HousingWire reports on commissions, highlighting that buyer agent commissions have steadily declined over the past few years from 2.89% in 2013 to 2.66% in 2023. The most significant recent declines were seen in Detroit, Cleveland, and Miami, while commissions remain highest in Austin, Cincinnati, and San Antonio, and lowest in Nassau County, Providence, and Anaheim.

Redfin chief economist Daryl Fairweather comments on the commission reduction: “Still, even before the blitz of publicity around the class-action lawsuits and NAR settlement, commissions were coming down. That’s partly because of the competitive housing market before and during the pandemic – which motivated some sellers to offer a low commission because they knew they could still attract buyers – and greater fee transparency.”