House hunters take note: The blazing-hot housing market is finally cooling down

A blazing-hot housing market is starting to cool across the U.S., a sign of hope for potential homebuyers who have spent months shopping for a new home amid the most daunting circumstances in decades. 

The combination of rising mortgage rates and skyrocketing home prices have prompted some buyers to bail on the market entirely, thus lowering competition, economists say. With fewer people vying for the same house, asking prices and the number of homes being sold have taken a noteworthy plunge.

The average interest rate for a fixed 30-year home loan reached about 5.3% this week. That's a 13-year high, Realtor.com Chief Economist Danielle Hale told CBS News. Today's mortgage rates are adding hundreds of extra dollars to monthly payments and people don't like that, Hale said. 

"At the end of the day, some buyers are taking a step back and reassessing their options because the costs are just too much," she said. 

The median home price in the U.S. reached $425,000 in April, up 14% from a year ago and 32% from two years ago, according to Realtor.com. Some parts of California, particularly Santa Barbara and Santa Cruz, have median home prices north of $1 million. 

U.S. home prices have soared this year, in part because demand for houses has outstripped supply. Construction companies cut back on building new homes during the coronavirus pandemic and now there aren't enough homes available to sell. Home prices have also climbed because some longtime homeowners chose to delay selling and stay put as the pandemic swept across the nation.

The rise in prices has been widespread, with Florida cities Miami, Orlando and Tampa seeing some of the sharpest increases. Prices in San Diego; Charlotte, North Carolina; and Atlanta have also climbed.

Indeed, this spring has pushed the dream of homeownership beyond the grasp of many middle-class Americans, but economists said the summer might be a better window for shoppers who choose to stay the course. 

Data released this month from real estate trackers adds further proof the market is softening. For example:

• The number of existing homes sold fell 2.4% last month, the third straight month of declines, the National Association of Realtors said. 
• Mortgage applications dropped 1% last week and 11% the week before that, according to data from the Mortgage Bankers Association. 
• About 1 in 5 U.S. home sellers lowered their price at some point in May, the highest number of drops since October 2019, according to Redfin. Rochester, New York; Detroit, Michigan; and Toledo, Ohio, have seen some of the biggest price drops, according to Realtor.com.
  
• Sales of newly built homes fell 16.6% in April, according to U.S. Census data released this week. 
• Pending home sales fell almost 4% between March and April, the realtors association said Thursday.   

Ultimately, said Hale, "the housing market is adjusting and it's adjusting in a big way."