Existing-home sales grew 1.3% in July to a seasonally adjusted annual rate of 3.95 million, stopping a four-month sales decline that began in March. However, sales slipped 2.5% from one year ago.

The next five years will be a challenging time for both homebuyers and renters.

ICE Mortgage Monitor: As Market Gradually Shifts to Higher Rates, Latest Data Identifies Possible Refinance Tipping Point

It’s too soon to call the housing market an affordable one as prices and borrowing costs are still high. Yet some signs are pointing toward a notable, buyer-friendly shift.

Monthly housing payments are falling as mortgage rates decline, but many house hunters remain on the sidelines, with pending sales posting their biggest drop in nearly nine months. That’s because sale prices are still near record highs; additionally, some would-be buyers are wary of political and economic instability.

We document that mortgaged homebuyers pay an 11% premium relative to all- cash buyers in residential real estate transactions. This premium far exceeds the 3% premium implied by a realistically calibrated model of rational home sellers with trans-action frictions.

More buyers are leveraging equity from a previous home sale and dodging higher mortgage rates. Home buyers who paid cash accounted for 32% of home sales in January, marking the highest rate since 2014, the National Association of REALTORS® reports. Many leveraged the equity from a prior home sale.

Like most of the country, Michigan experienced a red-hot real estate market during the pandemic as people reallocated funds to housing and took advantage of low interest rates. Now, with rates up, fewer people are selling their homes. That has reduced inventory but not prices, as buyers compete for fewer properties.

Buying a home with cash is an increasingly uncommon occurrence, especially as rising home prices outpace income growth. The median home sale price is currently over $417,000, making it difficult for even the most diligent of savers to pull together enough cash to buy their home outright. Most buyers – 80% of recent home buyers, according to the National Association of REALTORS® 2023 Profile of Home Buyers and Sellers – finance their purchase, using a loan to cover the cost. However, if you have the money in your bank account, buying a house with a cash offer might seem like the smart financial move. If you’re jumping into the real estate market as a cash buyer, you might consider buying a house with cash.

Partially thanks to high mortgage rates, the percentage of homebuyers who pay cash has risen. As of September 2023, according to Redfin, 34.1% of U.S. home purchases were made in cash. This is up from 29.5% in September 2022, when mortgage rates were lower.