Housing Payments Post Biggest Decline in 4 Years Ahead of Fed's Historic Rate Cut,
Monthly housing payments have decreased by nearly $300 from April's peak, marking the most significant decline in four years. The median U.S. housing payment was $2,534 during the four weeks ending September 15, down 2.7% from the previous year. This decline is attributed to mortgage rates dropping to their lowest level in 20 months, coinciding with the Fed's first interest rate cut since 2020.
Despite the drop in monthly payments, pending home sales have not yet seen an uptick. Mortgage-purchase applications have risen by 5% week over week, but pending sales are down 6.9% year over year. This decline in pending sales is one of the largest since October 2023. New listings have increased by 5.1% year over year, and the total number of homes for sale has risen by 16.1%.
Several factors contribute to the stagnation in sales. Home prices continue to rise, and some potential buyers are waiting for mortgage rates to fall further. Additionally, some prospective buyers are unaware of the recent rate drops, while others are hesitant due to confusion over new NAR rules or are waiting until after the upcoming election.
Kristin Sanchez, a Redfin Premier agent in Nashville, TN, notes that buyers are closely monitoring interest rates and are poised to enter the market once there is more certainty regarding mortgage rates and the presidential election outcome. She predicts that the market may become busier in the winter, contrary to the usual seasonal trend.
The article also highlights the growing inventory of homes for sale. The combination of rising inventory and slow sales has led to an accumulation of for-sale homes, with many listings becoming stale. There are approximately four months of supply available on the market, the highest level since February, up from just over three months last year. A higher number of months of supply indicates a more buyer-friendly market.
The Fed's recent interest rate cut may encourage more buyers to enter the market. While mortgage rates are not expected to fall significantly in the coming weeks, the rate cut could prompt house hunters who had been waiting for lower rates to make their move. Redfin economists suggest that mortgage rates may fluctuate before the end of the year, depending on upcoming inflation and jobs reports.
The article provides various leading indicators of homebuying demand and activity. The daily average 30-year fixed mortgage rate was 6.15% as of September 18, down from 7.33% a year earlier. The weekly average 30-year fixed mortgage rate was 6.2% for the week ending September 12, down from 7.18% the previous year. Mortgage-purchase applications increased by 5% from the previous week but were down 0.4% year over year. The Redfin Homebuyer Demand Index remained essentially unchanged from a month earlier but was down 7% year over year. Touring activity was up 8% from the start of the year, while Google searches for "home for sale" were down 8% from a month earlier and 16% year over year.
Key housing-market data for the four weeks ending September 15, 2024, include a median sale price of $385,375, up 3.4% year over year, and a median asking price of $398,475, up 5.4%. The median monthly mortgage payment was $2,534 at a 6.2% mortgage rate, down 2.7% year over year. Pending sales totaled 75,933, down 6.9%, while new listings were 88,196, up 5.1%. Active listings were 998,854, up 16.1%, and the months of supply were 3.9, the highest level since February. The share of homes off the market in two weeks was 34.4%, down from 38%, and the median days on market were 37, up six days. The share of homes sold above list price was 27.5%, down from 32%, and the average sale-to-list price ratio was 99%, down 0.4 points.
At the metro level, Newark, NJ, Milwaukee, WI, and Providence, RI, saw the most significant year-over-year increases in median sale prices, while Austin, TX, Oakland, CA, and San Antonio, TX, experienced the largest declines. San Antonio, TX, San Jose, CA, and Phoenix, AZ, had the most significant increases in pending sales, while West Palm Beach, FL, Miami, FL, and New Brunswick, NJ, saw the largest decreases. Las Vegas, NV, Phoenix, AZ, and San Jose, CA, had the most significant increases in new listings, while San Antonio, TX, Atlanta, GA, and Austin, TX, experienced the largest declines.
The article concludes by encouraging readers to visit Redfin's "From Our Economists" page for more insights into the housing market and provides information on how to contact the author, Dana Anderson, and follow Redfin on Twitter for more updates.
