Redfin: Typical Monthly Housing Payment Drops
Mortgage rates dropped to their lowest level in months. Four Florida cities lead the nation with biggest YoY median sale price increases and new listings.
SEATTLE — The typical U.S. homebuyer’s monthly housing payment was $2,722 during the four weeks ending July 14, $115 lower than April’s all-time high, according to a new report from the real estate brokerage Redfin. That’s despite home prices sitting just about $100 shy of last week’s record high.
Daily average mortgage rates have dropped to their lowest level since February after last week’s cooler-than-expected inflation report, bringing homebuyers a bit of relief.
A homebuyer on a $3,000 monthly budget can afford a $450,000 home with a 6.8% mortgage rate, roughly the daily average as of July 17. That buyer has gained about $25,000 in purchasing power since rates hit a five-month peak in April, when they could have bought a $425,000 home with a 7.5% rate.
Rising supply is another piece of promising news for homebuyers, with new listings up 6.4% year over year and the total number of listings near its highest level in almost four years. More homeowners are selling because they’re tired of waiting for rates to drop significantly; it has been more than two years since they started rising from pandemic-era lows.
Buyers have yet to react strongly to falling rates and increasing inventory. Pending sales are down 5.6% year over year, the biggest decline in eight months, and Redfin’s Homebuyer Demand Index – a measure of requests for tours and other buying services from Redfin agents – is down 15%. Mortgage-purchase applications are down 3% week over week on a seasonally adjusted basis. That’s despite mortgage rates falling year over year; the 6.83% daily average as of July 17 is down from 6.9% a year ago. Some buyers are sitting on the sidelines because they’re hoping mortgage rates will decline more.
“Now that it’s looking increasingly likely the Fed will cut interest rates by the end of the year, some house hunters believe mortgage rates will fall more and are waiting for that to happen before they buy,” said Chen Zhao, Redfin’s economic research lead. “But they may be waiting in vain; it’s unlikely mortgage rates will drop much lower in the next few months, as markets are already pricing in the expectation of a rate cut in September, followed by several more at the end of 2024 and into 2025. In fact, now may be the right time for house hunters to get serious about making offers before prices increase even more and they lose some power. Plus, there are more homes to choose from, and many listings are growing stale, giving buyers an opportunity to negotiate.”
Another reason for slow demand is extreme heat in some parts of the country preventing house hunters from touring. Redfin Premier agent Kristin Sanchez of Nashville, Tennessee, said: “Severe heat waves are making people feel pretty much locked in their houses. They don’t want to come out to see homes because it’s miserable outside; open houses haven’t been getting much traffic.”
Redfin also found:
Metros with biggest year-over-year increases in median sale prices:
Fort Lauderdale (14.4%)
West Palm Beach (13.9%)
Metros with biggest year-over-year increases in new listings:
Miami (18.9%)
Jacksonville (17.4%)
Metros with biggest year-over-year decreases in pending sales:
West Palm Beach (-16.9%)
Source: Redfin.com
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