Spring homebuying season winds down with no sign of a rally 

Heading into the final week of the spring season, the housing market has yet to see any sustained momentum.

Pending sales remained sluggish as mortgage rates ticked up this week, and while mortgage applications increased, the rise may have been more of a post-holiday weekend bounceback than a true turnaround.

'Historic' buyers market presents opportunities

The market may be stalled in many areas, but for buyers who are willing and able to commit, this could be an ideal time to act, according to Chen Zhao, Redfin's head of economics research.

"Price growth has lost some steam over the last month, and prices aren't rising nearly as fast as they were last year," Zhao said. "And the high costs of purchasing a home are keeping many buyers out of the market, which has led to a historic buyer's market in most of the country."

"So even though prices are high, in many markets — especially places like Nashville and Austin, which were once red hot — the door is open for buyers to negotiate with sellers, ask for concessions and get the terms they want," Zhao said.

Redfin estimates pending home sales fell 0.6% for the week ending June 7, marking the fourth straight week of declines at a time of year when pending sales are usually peaking. 

Potential sellers seem aware of this trend, as inventory remains essentially flat. There's still enough supply for buyers to have leverage, but median home prices remain elevated.

Rates rise, cuts unlikely 

Mortgage rates rose slightly this week, according to Freddie Mac's weekly survey. The 30-year rate averaged 6.52%, up from 6.48% the week before. Last year at this time the rate was 6.84%.

Rates are expected to climb following this week's Consumer Price Index report showing inflation at a three-year high, Bright MLS Chief Economist Lisa Sturtevant predicts — and that could contribute to the "lock-in" effect keeping some homeowners sidelined.

"Higher rates will continue to hold back sellers with low rates who are reluctant to give them up," Sturtevant said. "Even though there are buyers who have been undeterred by higher rates and remain in the market, they may not be able to find a home as inventory growth starts to slow. As a result, it is likely to be a slow summer housing market."

The Federal Reserve, which meets next week, isn't likely to cut short-term interest rates given  current inflation levels and a resilient jobs market, according to Realtor.com economist Jiayi Xu.

"What began as a question of when the Fed would cut rates has quietly shifted — ongoing global tensions and rising energy prices have prompted some to wonder whether a rate increase may be back on the table," Xu said.

Application activity jumps

Both refinance and purchase applications rebounded coming out of the Memorial Day weekend, the Mortgage Bankers Association (MBA) reported. Overall applications rose 10.8% for the week ending June 5, while seasonally adjusted purchase applications rose 7% and the refinance index jumped 15%.

While weekly mortgage rate averages have remained in a fairly tight range over the past few weeks, they've been volatile on a daily basis — driven by the latest headlines on the Middle East war — providing some opportunities for borrowers, noted Mike Fratantoni, MBA's chief economist.

The big movement in refinance applications is a sign of how closely homeowners are watching rates, according to Kyle Bass, production business manager at Refi.com.

"That snapback makes sense given that refi applications fell by as much as 18.1% in a single week during May, and reinforces that borrowers who are ready to move don't need rates to fall dramatically," Bass said.