CMRE Market Pulse: Navigating High Rates & Shifting Sands in Real Estate

The real estate landscape is rarely static, and recent reports from across the housing sector paint a picture of a market in constant motion, adapting to elevated mortgage rates and evolving demand. Here at Custom Mortgage Real Estate (CMRE), we're breaking down the latest trends so you can navigate the market with confidence.

New Home Sales: A Modest Rebound with Nuance

After a period of relative flatness since early 2023, new home sales showed a modest rebound in June, rising 1.6% from May to a seasonally adjusted annual rate of 628,000. While this offers some relief, activity remains 5.6% below year-ago levels, signaling that high mortgage rates and affordability hurdles continue to temper buyer enthusiasm.

Interestingly, inventory edged slightly lower to 485,000 homes, translating to a 9.3-month supply. This indicates a still robust market for new constructions. We also saw a decline in home prices, with the median sales price falling to $398,300 (-3.3% MoM) and the average price dropping to $475,400 (-9.5% MoM). It's crucial to remember, however, that these price shifts in new home data can be influenced by builders adjusting their offerings, perhaps constructing smaller or less amenity-rich homes to meet budget-conscious buyers, rather than a direct depreciation of existing assets.

Mortgage Applications: Purchase Power Defies High Rates

Despite borrowing costs climbing to their highest point since last August – with the 30-year conforming rate now at a notable 6.69 percent – overall mortgage application activity saw a 1.9% increase last week. This resilience was largely driven by a robust 6% surge in purchase applications, which even edged 0.2% higher than the same week a year ago.

What's fueling this defiance in demand? Improving housing inventory in many markets appears to be the key, providing buyers with more options and seemingly offsetting the impact of higher rates. Conversely, refinance activity saw a modest 2% decline from the prior week, though it still stands 7% above year-ago levels, suggesting a segment of homeowners are still finding opportunities to optimize their existing mortgages. With oil prices on the rise again, the MBA's Chief Economist, Mike Fratantoni, suggests that recent improvements in inflation might not continue, implying mortgage rates could remain elevated.

Housing Construction: Multifamily Leads the Charge, Caution Ahead

On the supply side, residential construction demonstrated a strong rebound in June, with housing starts jumping an impressive 19.0% to an annual rate of 1.427 million. This surge largely reversed May's unusually weak figures and puts us 3.5% above June 2025.

However, a closer look reveals the story is largely driven by multifamily construction, which saw starts surge dramatically. Single-family starts, on the other hand, remained essentially unchanged, slipping just 0.2%. This volatility in multifamily data clarifies that May's dip was more of an anomaly than a broad downturn.

Looking ahead, building permits – a strong indicator of future construction activity – tell a story of builder caution, declining 3.0% overall and 2.4% for single-family homes. While current activity is robust, builders are clearly exercising prudence when planning new projects, likely due to ongoing economic uncertainties and elevated interest rates.

What Does This Mean for Your Real Estate Journey with CMRE?

The current housing market is a testament to resilience, particularly in the face of persistently high mortgage rates. We're seeing buyers eager to enter the market when inventory improves, new home sales showing life, and construction actively working to replenish supply – albeit with a strong leaning towards multifamily units.

For buyers, while rates are high, increased inventory can mean more choice and potentially less intense bidding wars in some areas. For sellers, understanding local market dynamics and pricing strategies is more critical than ever. And for homeowners, exploring refinance options remains worthwhile, even if the primary driver shifts from rate reduction to other financial goals.

At CMRE, we understand that these trends can feel complex. Whether you're looking to buy your first home, refinance an existing mortgage, or invest in real estate, our team of experts is here to provide personalized guidance. Navigating a market with 6.69% rates and shifting supply requires a nuanced approach, and we're committed to helping you make informed decisions every step of the way.

Contact CMRE today to discuss how these market insights apply to your unique mortgage and real estate goals!