We recently sat down with UMB National Mortgage Sales Manager Matt Locke to hear his take on the summer housing market and insights for consumers looking to buy, sell or make updates to their homes.
What’s the status of the housing market this summer?
There are several signs that show the housing market is balancing out. According to the latest Monthly Housing Trends Report from Realtor.com®‡, asking prices fell 2.5% year over year in June 2026, the steepest annual decline in Realtor.com data since 2017, and the eighth consecutive month of price drops.
Perhaps the most interesting thing we are seeing is a split in leverage depending on location. According to Fast Company‡, nationally, the median list price of a home is down by 4.2% from 2022’s peak prices. But listing prices are up by 10% in the Midwest and 12.6% in the Northeast compared to June four years ago. In the West, the median home listing price is down 7.3%, a dip almost twice as dramatic as the national price drop.
Because of this fragmentation, it is more important than ever to work with a reputable local lender who understands the specific nuances of your market and your unique financial situation before making any decisions.
Most consumers are feeling the pinch in their expenses at the grocery store and for everyday needs. How is the larger economy spilling over into the housing market?
We believe inflation data is a big driver of mortgage interest rates, which of course play a huge role in the price you end up paying for your home. If inflation continues to rise over the summer, interest rates are likely going to move higher in anticipation of a Fed response, like higher overnight rates, later in the year.
And how do these shifts trickle down?
Interest rates are the biggest driver of the housing market. From a timing perspective, individuals should evaluate their buying comfort at the current interest rate and how that aligns with their short- and long-term planning. I always recommend that clients closely evaluate their financial situation, including how long they plan to own the home, since this data helps inform whether a home purchase makes sense today.
For those that have been waiting to refinance, when should they start shopping around?
Mortgage interest rates continue to be elevated and, from what we’ve seen, this is not ideal timing for refinancing. We recommend keeping an eye on the interest rate spread between your current mortgage rate and what is being offered in the market.
It’s also smart to evaluate the total cost for the refinance (ex: loan closing costs) and how long it takes to “break even” on the refinance. For example, how many months of a lower mortgage payment would it take for the monthly savings to match the cost of the refinance. Connect with your banker or mortgage professional to help you map out this cost/benefit calculation.
If the financials don’t make sense, but you’re still eager to optimize your mortgage, consider making extra payments on your principal amount, which will pay down your mortgage quicker and ultimately save you money by reducing interest costs.
There is a reason we say, “date your rate and marry your home.” For those tied to a rate they don’t love right now, you don’t need to wait for a massive market crash in rates. If rates dip even marginally below their current rate, or if their credit profile has improved significantly, it’s worth pulling a fresh loan estimate, which is the standardized three-page mortgage document that lenders are legally required to provide within three business days of receiving your application. It details your projected monthly payments, interest rate, and itemized closing costs to help you accurately compare offers across different lenders.
Any other considerations for those looking to buy?
A lot of what I have mentioned is out of the everyday buyer’s control. However, I like to remind people that when mortgage rates are high, buyers can regain a sense of control over several critical pieces of the mortgage-shopping process to reduce total interest costs, lower monthly payments, and secure a better deal:
- Shop around for the best rates: You don’t have to move forward with the first lender you speak with. Savvy homebuyers review multiple lenders and rates before choosing.
- Negotiate with sellers for incentives: With this more balanced housing market, we are seeing “as is” sales start to decline, and the overbidding pressure to ease. This is the time to leverage your agent to help find savings that go beyond the home price, such as rate buydowns, repair credits, closing cost help, and other concessions.
- Aim to improve your credit: Hopefully, you already had a good idea of your credit score and variables before starting to shop, but, if not, be sure to check annualcreditreport.com to understand how lenders are viewing your mortgage application. If your score is lower than you’d like, take some time to improve it before buying.
- Explore different loan structures: While the 30-year conventional, fixed-rate mortgage is the classic choice of homebuyers, don’t skip the opportunity to review your other choices. Mortgage can vary in rates, term length and funding.
All mortgage loan quotes consider your credit score, debt to income ratios, and exact loan to value, as these three variables impact the interest rate you will receive.
When you shop around for rates, make sure you pay attention to both interest costs and the total closing costs. In some cases, lenders may quote a lower interest rate but increase the fees or points substantially, making it difficult for the consumer to compare quotes from different lenders. Make sure you obtain an actual “loan estimate” from each lender so you can compare the quotes side by side.
What are your thoughts for those thinking of making home improvements this summer?
Renovating is a fantastic alternative to moving right now, but you must be intentional. Inflation and a limited workforce have increased the cost of renovations over the past five years, making it more important than ever to focus on high-ROI projects like kitchens, bathrooms and siding.
Consider the “30% rule”: Avoid spending more than 30% of the current value of your home on renovations. Following this rule helps prevent homeowners from over-improving their house, as property values are inherently tied to the rest of the neighborhood.
Whether you are ready to renovate your current space or buy a new home altogether, always work with a trusted financial advisor to determine which option aligns with your goals. They can help you explore how different interest rates impact your borrowing capacity and repayment plans.
Any final thoughts?
Consumer confidence also plays a role in the housing market. There is never a perfect time to buy a house, but if buyers are financially well-positioned for homeownership, long-term data in the U.S. has shown it is a good investment versus renting.
To brush up on more home buying basics, check out our blog or visit our website to learn more about home financing solutions built for you.
Navigate the homebuying process and learn about the benefits of owning a home through the Owning a Home playlist on the UMB Financial Education Center. Use our mortgage calculator to see the impact of these variables along with an amortization schedule.
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