Housing market "normalizing," Freddie Mac economist says

The housing market's exceptionalism is fading.

Driving the news: After years of booming sales and prices, the market is "normalizing," Freddie Mac chief economist Sam Khater said Thursday in a statement.

• His evidence: higher mortgage rates, rising supply and a declining pool of buyers.

Why it matters: Experts have been waiting for signs that the housing market is poised to cool off as the broader economy hits rockier terrain.

Context: The U.S. housing market last year experienced its highest one-year increase in home prices since at least the 1970s, according to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index.

• Prices rose 18.8% in 2021.
• And prices have continued their upward march in 2022, with Realtor.com reporting today that the median national home price reached an all-time high of $447,000 in May.

But, but, but: The rapid rise in mortgage rates over the last few months is quickly slowing things down.

• 30-year fixed mortgage rates are averaging 5.09%, up from 2.99% a year ago, according to Freddie Mac.
• In May, active housing inventory notched its first year-over-year increase in three years, Realtor.com reported today.

Nathan's thought bubble: As an older millennial, the financial crisis trained me to think that housing prices that go up must come down. But this has the makings of a softer landing.

What we're watching: Whether sellers begin to lower their expectations.

• "In an early sign, the rate of sellers making price cuts accelerated in May," Realtor.com chief economist Danielle Hale said in a statement.